Assume a market that has an equilibrium price of $4. If the market price is set at $8, which of the following is true?
A. Some surplus is transferred from consumers to producers, causing total surplus to increase.
B. All surplus is transferred from consumers to producers, and total surplus stays the same.
C. Some surplus is transferred from consumers to producers, but total surplus falls.
D. Some surplus is transferred from producers to consumers, but total surplus falls.
Answer: C
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If households in the economy decide to take money out of checking account deposits and put this money into savings accounts, this will initially
A) decrease M1 and decrease M2. B) increase M1 and decrease M2. C) decrease M1 and not change M2. D) decrease M1 and increase M2.
Which of the following will decrease the money supply?
A) an increase in the discount rate (relative to the federal funds rate) B) an increase in the required reserve ratio C) an open market purchase by the Fed D) a and b E) a, b, and c
In finance, the leverage ratio refers to:
A. ratio of assets it has relative to its equity. B. using borrowed money to pay for investments. C. how a firm decides to borrow funds that it doesn't have. D. ratio of assets it has relative to debt.
Because pollution taxes raise the costs of production for firms, firms:
A. will lower prices to consumers. B. must receive a higher price at every level of output. C. will increase the quantity produced at every price. D. will quit producing goods that generate pollution.