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Which of the following methods may the Federal Reserve use to reduce inflationary pressures?
The Fed can increase margin requirements as a means to decrease the economy's money supply. This is a viable contractionary monetary policy used by the Fed to lower the economy's price level.
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Which of the following individuals would be most hurt by an unanticipated increase in inflation?
A retiree living on fixed income would be hurt because the retiree's income would not increase to offset the negative effects of inflation.
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If the Federal Reserve raises the discount rate, which of the following effects is likely to occur?
Declines in the money supply lead to an increase in interest rates.
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Under which of the following conditions is the supplier most able to influence or control buyers?
When there are few good substitutes for a supplier's product, the supplier has market power.
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Which one of the following is not one of Porter's five forces?
Existence of complementary products is not one of Porter's five forces.
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When will new companies attempt to enter a market?
Under monopolistic competition, barriers to entry are low, and potentially high profits exist in the market. This would incentivize new firms to enter the market.
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