The interest rate is the price borrowers pay to borrow money. Key interest rates are controlled by the Federal Reserve System. If the Federal Reserve acts to reduce interest rates, economists would expect the demand for money to
A. increase.
B. decrease.
C. not change.
D. Uncertain-economic theory has no answer to this question.
Answer: C
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There are a few firms in the automobile industry in Poorland. In order to prevent a price war, these firms have secretly agreed to charge a price 20% above the marginal cost of production. This is an example of ________
A) free riding B) undercutting C) collusion D) cost-cutting
Which of the following statements is true?
A) Marginal analysis is a key component in the process of optimization in levels. B) Only direct costs are considered when the net benefits of the alternatives are calculated. C) In both the techniques of optimization, all costs have to be converted to the same unit of measurement. D) Optimization in levels calculates the change in net benefits when a person switches from one alternative to another.
A buyer's consumer surplus on a unit of a good is its value to that buyer minus what the buyer actually pays for it
a. True b. False
If the government ran a major deficit, and there was no noticeable effect on the level of GDP, this could be taken as evidence of
a. crowding-in. b. structural deficit. c. crowding-out. d. monetary policy ineffectiveness.