If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to
a. $4.
b. $16.
c. $20.
d. $36.
a
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A student argues: "Economic surplus is greatest at the level of output where the difference between marginal benefit and marginal cost is largest." This statement is false because
A. the marginal benefit and marginal cost relationship has no relevance to economic surplus. B. the level of output where the difference between marginal benefit and marginal cost is largest will be below the output level needed to have the maximum economic surplus. C. the level of output where the difference between marginal benefit and marginal cost is largest will also have the highest producer and consumer surplus. D. the level of output where the difference between marginal benefit and marginal cost is largest will be above the output level needed to have the maximum economic surplus.
Having interest rate stability
A) allows for less uncertainty about future planning. B) leads to demands to curtail the Fed's power. C) guarantees full employment. D) leads to problems in financial markets.
The velocity of money in circulation measures: a. the average length of time that people hold wealth
b. how fast aggregate spending will increase for a given decline in money demand. c. how fast inflation will rise for a given increase in the money supply. d. how quickly money changes hands. e. how quickly banks can create money.
The country of Zlatan is in serious financial crisis after the banks of the country suffered huge losses. Most of the loans were granted to customers without any proper verification, resulting in a high rate of default. The government decided to create an Office of Thrift Supervision to insure deposited funds and to ensure that banks do not indulge in risky lending. Which of the following is a
likely consequence of this step? a. Banks will stop purchasing government bonds. b. Banks will stop keeping a certain amount of their reserves as deposits with the central bank. c. Banks will want to ensure that the difference between their assets and liabilities is positive. d. Banks will stop purchasing government bonds.