In which case would you be most likely to expect inflation to occur?
A. The government runs a sustained primary deficit by increasing purchases.
B. The government funds its sustained deficit by increasing the money supply.
C. The government runs a sustained government deficit by increasing purchases.
D. The government runs a sustained government deficit by lowering taxes.
Answer: B
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Explain why selling output at a price below that at which marginal revenue equals marginal cost (MR = MC) might serve to deter entry of a potential competitor
What will be an ideal response?
When long-run average total cost increases as output increases, a firm experiences
a. diseconomies of scale b. economies of scale c. constant returns to scale d. decreasing marginal cost e. greater total cost in the long run than in the short run
Reserves that banks are required by law to keep on hand to back up their deposits are called
a. required reserves. b. borrowed reserves. c. actual reserves. d. excess reserves.
Refer to the information provided in Figure 3.18 below to answer the question(s) that follow.
Figure 3.18Refer to Figure 3.18 The market is initially in equilibrium at Point A. If demand shifts from D1 to D2, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.
A. $4.00; 150 B. $3.00; 250 C. $6.00; 250 D. $4.00; 350