Scarcity can best be defined as a situation in which:
A. there are no buyers willing to purchase what sellers have produced.
B. there are not enough goods to satisfy all of the buyers' demand.
C. the resources we use to produce goods and services are limited.
D. there is more than enough money to satisfy consumers' wants.
Answer: C
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The figure above shows the market for pants. If 6 million pairs of pants are produced, the deadweight loss is
A) zero. B) the triangle ABE. C) the triangle BCE. D) the triangle ACE. E) the triangle BCE minus the triangle ABE.
Banks use "credit-risk analysis" to
A) determine the appropriate interest rate to charge borrowers. B) determine whether to invest in the stock of a corporation. C) determine the appropriate interest rate to pay depositors. D) determine the likelihood of an audit by bank regulators.
Economists such as James Tobin and Paul Samuelson claimed that _________ provided solid evidence of the effectiveness of Keynesian policies
a. increases in deficit spending accompanied by extremely low unemployment during WWII b. increases in taxes accompanied by rising federal budget surpluses c. increases in the money supply accompanied by falling interest rates d. price controls accompanied by inflation
How are Treasury bond prices affected when the interest rate falls?
a. The purchaser of the bond needs to spend less money to obtain a given number of dollars of interest per year, so the price of the bond must decrease. b. The purchaser of the bond needs to spend more money to obtain a given number of dollars of interest per year, so the price of the bond must increase. c. The purchaser of the bond needs to spend more money to obtain a given number of dollars of interest per year, so the price of the bond must decrease. d. The purchaser of the bond needs to spend less money to obtain a given number of dollars of interest per year, so the price of the bond must increase.