At an equilibrium price, quantity demanded
A. exceeds quantity supplied.
B. equals quantity supplied.
C. is less than quantity supplied.
D. Any of the above is possible.
Answer: B
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Figure 4.5 shows the supply curves of a non-durable good. A shift from the supply curve S to S' could be caused by:
a. a patent application that restricts the use of a particular production technology. b. a decrease in consumer income. c. an expectation of a higher product price in the future among suppliers. d. an increase in the current price of the product. e. several competing producers going out of business.
If the national debt is growing no faster than GDP,
a. the government will have to raise taxes b. the nation's standard of living will fall c. government investment spending will be negative d. the government can pay interest on the debt without having to raise taxes e. the government will be unable to pay interest on the debt
Professor Cowen suggests that, in practice, fiscal policy is not ideal because:
A. voters typically expect the federal government to balance its budget even during a recession. B. elected officials have an incentive to raise taxes even when the appropriate fiscal policy response is to cut taxes. C. the federal government continually has budget deficits rather than having surpluses when the economy is healthy. D. political infighting makes it unlikely that Congress will ever approve a budget, let alone approve fiscal policy actions.
Given a required reserve ratio of 20 percent for all banks, total bank reserves of $300 billion could support maximum deposits of:
A. $2,000 billion. B. $1,200 billion. C. $1,500 billion. D. $60 billion.