Commercial banks are able to create money by
A) printing Federal Reserve Notes.
B) making loans.
C) making customers pay back their loans.
D) exchanging their reserves at the Fed for currency.
B
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Governments tend to set price ceilings:
A. to ensure everyone can afford certain goods. B. to ensure producers make enough for everyone. C. to ensure producers make enough profit to stay in the industry. D. to prevent consumers from choosing the wrong goods.
Game theory is used in a number of areas in economics. What is the primary reason that it is used in analyzing oligopoly type market structures?
a. The firms are producing a similar product b. The firms are producing differentiated products c. The demand curve facing the oligopolistic firms is perfectly inelastic d. The mutual interdependence of firms in industries with a small number of firms e. The demand curve the oligopolistic firm faces is downward sloping
If the demand for a product is perfectly inelastic, the incidence of an excise tax will be:
A. entirely on the buyer. B. mostly on the buyer. C. entirely on the seller. D. mostly on the seller.