Which of the following would most likely reduce the number of bank failures?
a. an increase in the number of small banks
b. tighter restrictions on interstate banking
c. creating a system of deposit insurance
d. encouraging banks to make more risky loans
c
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Suppose that Firms A and B each produce high-resolution computer monitors, but Firm A can do so at a lower cost. Cassie and David each want to purchase a high-resolution computer monitor, but David is willing to pay more than Cassie. If Firm B produces a monitor that David buys, then the market outcome illustrates which of the following principles? (i) Free markets allocate the supply of goods to
the buyers who value them most highly, as measured by their willingness to pay. (ii) Free markets allocate the demand for goods to the sellers who can produce them at the least cost. a. (i) only b. (ii) only c. both (i) and (ii) d. neither (i) nor (ii)
The government has a budget deficit if
A) its total revenues are equal to its total expenditures. B) its total revenues are less than its total expenditures. C) its total revenues are greater than its total expenditures. D) the money supply is less than total expenditures.
Which of the following correctly explains why sellers in a perfectly competitive market are price takers?
A. There are few sellers, and so they have the power to take whatever price they want. B. There are many sellers, and so the market process generates an equilibrium price that cannot be influenced by any one seller. Thus they have no choice but to take the price generated by the market process. C. Sellers in a competitive market have the power to influence price by colluding with one another and using quotas to limit overall market output and thus raise price. D. Individual buyers in a competitive market have the power to influence price, and thus can impose prices and other conditions on powerless sellers.
An efficient point of production is
A. the point where scarcity no longer exists. B. a point inside the production possibilities curve. C. the point where we are currently producing. D. a point on the production possibilities curve.