Businesses go to credit markets in order to
A. obtain financial assets that can be used to buy capital.
B. obtain capital so they can earn rents.
C. channel their savings into investments.
D. obtain capital.
Answer: A
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Suppose that Arnold spends all his income on bratwursts and piano lessons and his marginal utility per dollar on bratwursts is lower than that on piano lessons. Is Arnold maximizing his utility? Why or why not?
What will be an ideal response?
If a regulatory commission sets the regulated price equal to marginal cost for a natural monopoly:
a. losses will result. b. government subsidies will be unnecessary. c. the firm will earn economic profits. d. new firms will want to enter. e. resource use will not be optimal.
Suppose in an economy, investment = $40, saving = $50, government spending+export = $100 and taxes+imports = $110 . Then for this economy, total leakages exceed total injections by:
a. $30. b. $25. c. $10. d. $45. e. $20.
Refer to Exhibit 6-2. The unemployment rate in year 2 is
a. 75 percent. b. 33 1/3 percent. c. 50 percent. d. 66 2/3 percent. e. 25 percent.