The supply curve of loanable funds is upsloping because:
A. businesses find more investments to be profitable at low interest rates than at high interest
rates.
B. government budget deficits vary inversely with the equilibrium interest rate.
C. households are willing to save more at high interest rates than they are at low interest
rates.
D. banks lend more at low interest rates than they do at high interest rates.
Answer: C
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The demand curve facing a perfectly competitive firm is
a. vertical at the equilibrium b. perfectly inelastic c. downward sloping d. horizontal at the market price
A positive externality exists and government wants to apply a per-unit subsidy in order to bring about an efficient outcome. Under what condition will the solution (the subsidy) be worse than the problem (the market failure)?
A) Under the condition that the subsidy is greater than the marginal external benefit (associated with the positive externality). B) Under the condition that the post-subsidy output is not farther away from the efficient level of output than the pre-subsidy output is from the efficient level of output. C) Under the condition that the post-subsidy output is farther away from the efficient level of output than the pre-subsidy output is from the efficient level of output. D) Under the condition that the subsidy is less than the marginal external benefit (associated with the positive externality). E) none of the above
When the receipts given by goldsmiths to depositors were used to make purchases,
A. the gold standard was created. B. existing banking laws were violated. C. the receipts became in effect paper money. D. a fractional reserve banking system was created.