List two reasons why a firm might experience diseconomies of scale
What will be an ideal response?
(1.) Large operations are often difficult to manage.
(2.) Larger firms are more likely to face problems with organized labor.
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If a bank borrows from a Federal Reserve Bank, the interest rate is called
A) the prime rate. B) the discount rate. C) the Fed funds rate. D) the reserve availability rate.
A firm in long-run equilibrium under monopolistic competition will earn
A) zero economic profits because of free entry. B) positive monopoly profits because each sells a differentiated product. C) positive oligopoly profits because each firm sells a differentiated product. D) negative economic profits because it has economies of scale. E) positive economic profit if it engages in international trade.
What effect would a Federal balanced budget requirement have on automatic stabilizers?
a. They would be stopped because in a recession automatic stabilizers increase the deficit by automatic spending. b. They would be stopped because in a recession automatic stabilizers decrease the deficit by automatic spending. c. They would become more important because in a recession they would increase spending and taxes automatically. d. They would become more important because in a recession they would decrease spending and taxes automatically.
Which of the following would be categorized as an unconventional monetary policy tool?
A. Targeted asset purchases B. Federal funds rate target range C. Deposit rate D. The interest rate on excess reserves (IOER)