The interest rate in the federal funds market:
a. is determined by the imposition of price controls imposed by the Fed.
b. rises when the quantity of funds demanded by banks seeking additional reserves exceeds the quantity supplied by banks with excess reserves.
c. will fall if the Fed sells bonds and, thereby, reduces the reserves available to banks.
d. is an interest rate that is largely unaffected by the policies of the Fed.
b
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The table above shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $6. What is Evan's shut-down price?
A) $6 per sandwich B) $4 per sandwich C) $3 per sandwich D) $5 per sandwich
In the open-economy macroeconomic model, if the U.S. interest rate rises, then U.S
a. net capital outflow rises, so the supply of dollars in the market for foreign exchange shifts right. b. net capital outflow rises, so the demand for dollars in the market for foreign exchange shifts right. c. net capital outflow falls, so the supply of dollars in the market for foreign exchange shifts left. d. net capital outflow falls, so the demand for dollars in the market for foreign exchange shifts left.