According to the AS/AD model, in the short run an increase in the federal funds rate will
What will be an ideal response?
decrease the price level and decrease real GDP
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Some corporate governance experts believe that serving on a company's board of directors for an extended length of time ________that member's independence from the company's CEO. If this is true, it would tend to ________ the principal-agent problem
A) enhances; increase B) has no impact on; increase C) diminishes; increase D) diminishes; decrease
Any business wanting to attract financial capital must expect to
A) earn a positive economic profit. B) keep implicit costs as close to zero as possible. C) pay a normal rate of return. D) pay a below normal rate of return in order to make a positive rate of return itself.
There are ten states in the democratic nation of Katlandia, and each state has ten thousand residents. Although incomes vary, each Katlandian pays a tax equal to the total cost of all government projects divided by the number of residents in the country. Currently, two states each have one army base. An army base adds $2 million to a state's local economy each year. In addition, in terms of increased security, the annual marginal benefit to Katlandia of having an additional army base is shown below. The total cost of an army base is $8 million per year.
Suppose the department of defense proposes to build a third base in the state of New Porkswick. The
state representative from New Porkswick will ________ this proposal because ________. A. support; it is socially optimal for Katlandia to have a third army base. B. not support; the benefits to his or her constituents would be smaller than the resulting increase in taxes. C. not support; it is not socially optimal for Katlandia to have a third army base. D. support; the benefits to his or her constituents would outweigh the resulting increase in taxes.
Under both perfect competition and monopoly, a firm:
A. faces a perfectly elastic demand curve. B. maximizes profit by setting marginal cost equal to marginal revenue. C. sells at a price equal to the minimum average total cost. D. sells at a price equal to marginal cost.