What do economists mean when they discuss "scarcity"?
What will be an ideal response?
Scarcity occurs whenever people's wants exceed the ability of the available resources to meet these wants. Because people's wants are effectively infinite-it is always possible to imagine more good things to want to have-wants will always exceed what can be produced with the available resources, and so scarcity will always be present.
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In a circular flow diagram,
i. the value of production = income. ii. the value of production = expenditure. iii. expenditure = income. A) i and ii are true statements. B) i and iii are true statements. C) Only iii is a true statement. D) Only i is a true statement. E) i, ii and iii are true statements.
In the market for reserves, if the federal funds rate is between the discount rate and the interest rate paid on excess reserves, an increase in the reserve requirement ________ the ________ for reserves and causes the federal funds interest rate to
rise, everything else held constant. A) decreases; demand B) increases; demand C) increases; supply D) decreases; supply
Combining commercial banking and investment banking in the same organization produces a risk for that organization
A) that must be above that of investment banking. B) that is the same as investment banking, the riskier of the two activities. C) somewhere in between the risk of the two activities. D) that may be below that of commercial banking.
During the Great Depression we observed:
a. higher prices. b. higher real wages. c. lower output. d. higher money wages. e. both b and d.