Over the years most monetary policy experts would agree with each of the following statements, except:
A. the reserve requirement is not useful as an operational instrument.
B. central bank lending is necessary to ensure financial stability.
C. transparency in policy making hinders accountability.
D. short-term interest rates are the best tool to use to stabilize short-term fluctuations in prices and output.
Answer: C
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In games, strategies are:
A. the outcomes players want to achieve. B. the same for everyone to achieve the same goal. C. the plans of action that players follow to achieve their goals. D. All of these statements are true.
If profit-seeking entrepreneurs are going to be successful, they must
a. produce a product that the consumers value more than the resources required for its production. b. produce the product more cheaply than their rivals regardless of quality. c. maximize the salaries of high-level management so they will be able to attract people who will work hard. d. charge a higher price than their competitors so they can make economic profits in the long run.
Mining of "conflict diamonds" tends to:
A. be more profitable as warring factions are willing to pay more for the diamonds. B. occur at a slower pace than would maximize the long-term stream of profits because war increases extraction costs. C. occur at a pace slower than would maximize the long-term stream of profits since the war disrupts production. D. occur at a pace faster than would maximize the long-term stream of profits since warring factions extract diamonds as quickly as possible due to fears that they may soon lose control of the diamond mines.
If the market price is $50 for a unit of a good produced in a perfectly competitive market and the firm's minimum average variable cost is $52, then to maximize its profit (or minimize its loss) the firm should
A) definitely produce the unit. B) shut down. C) not produce the unit but remain open. D) not produce the unit. Whether the firm should shut down or remain open cannot be determined without more information. E) produce the unit only if the price exceeds the average fixed cost.