The Fed Could Sell Bonds in the Open Market in an Effort

question 36

Multiple Choice

The Fed could sell bonds in the open market in an effort to keep interest rates constant when

• A)The discount rate increases.
• B)Money demand increases.
• C)The reserve requirement increases.
• D)Money demand decreases.

Understand the characteristics and effects of monopoly in the market.

Identify sources and types of monopoly power.

Differentiate between monopoly and perfect competition in terms of pricing, output, and market power.

Recognize the role of scarce resources, technology, and scale economies in the formation of monopolies.

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Definitions:

Purchasing Per Unit

The cost associated with buying an individual unit of product or material.

Relevant Costs

Costs that should be considered when making business decisions because they are future costs that differ between alternatives.

Fixed Overhead

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Released Facilities

Properties, equipment, or facilities that are no longer under contract or reserved, and are available for use or lease.