An increase in the money supply by the Federal Reserve is likely to increase
I. consumption expenditures
II. investment expenditures
III. interest rates
IV. the exchange rate
A) I, II, III, and IV
B) I, II, and III
C) I, II, and IV
D) I and II
Ans: D) I and II
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Lauren and Katy each bought a new bike lock for $20. Both Lauren and Katy would have paid $25 for the lock. The total consumer surplus for Lauren and Katy taken together equaled
A) $15. B) $10. C) $40. D) $20. E) $50.
Which of the following is a possible market solution to the lemons problem?
A) Producers might offer product guarantees and warranties. B) Producers might be required to meet certain legal standards to obtain licenses granting the right to sell their products. C) Government agencies might be charged with directly overseeing production and distribution of certain products. D) Liability laws might be established to ensure that firms selling certain products must face penalties in the event the products function poorly.
The outcome of a colluding oligopoly:
A. is more efficient than that of a competitive oligopoly. B. is the same as that of a monopolist. C. is less efficient than that of a monopolist. D. is more efficient than that of a monopolist.
Refer to the above figure. A surplus will exist when
A. the price is between $0 and $6. B. the price equals $10. C. the price equals $6. D. quantity demanded equals 15.