Figure 14-8
Refer to . At an interest rate of 4 percent there is excess
a.
money demand equal to the distance between a and b.
b.
money demand equal to the distance between b and c.
c.
money supply equal to the distance between b and a.
d.
money supply equal to the distance between c and b.
c
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Which of the following statements describes a basic difference in the economic effects of a tariff versus a quota?
A. A quota raises product prices, but a tariff does not. B. A quota reduces domestic consumption of the product, but a tariff does not. C. A tariff raises product prices, but a quota does not. D. A tariff allows imports to increase if demand increases, whereas a quota does not.
When the government passes a law making a particular good illegal, does it matter for the black market price and quantity if the penalties for breaking the law are imposed on the buyers or on the sellers?
What will be an ideal response?
Mel's House of Cars is an automobile dealership that sells both new and used cars. Two other dealerships located near Mel's pay their salespeople a straight salary - they receive no commission for each car they sell
Mel has decided to pay all of his salespeople a commission on all car sales. Which of the following is most likely to occur as a result of Mel's decision? A) Mel will experience a principal-agent problem. Some of his salespeople will tend to shirk because they will not be paid if they sell no cars, regardless of how hard they work. B) Mel will be able to hire some of the most productive salespeople who work for the other two dealerships. C) Mel risks violation of federal law that regulates firms' compensation policies. D) Mel will have difficulty finding salespeople. Research by labor economists has found that most employees prefer the security of a salary to the uncertainty of being paid based on how much revenue they generate for their employers.
According to the paradox of thrift, the more people try to save, the more income falls, leaving them with no more, and possibly less, income
Indicate whether the statement is true or false