In response to the destructive bank panics of the Great Depression, future bank panics are designed to be prevented by
A) establishing a fractional reserve system of banking.
B) increasing the required reserve ratio to 100%.
C) the establishment of the Federal Deposit Insurance Corporation.
D) the Federal Reserve System conducting open market operations.
E) the Federal Reserve System acting as a lender of last resort.
C
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Suppose aggregate demand is increasing over time. Would the modern Keynesian model assume that the price level would always be constant? Explain
What will be an ideal response?
Which of the following statements is FALSE?
A) The rationing function of prices is not allowed to freely operate when the government imposes price controls. B) Price controls may take the form of price ceilings or price floors. C) Price ceilings below the equilibrium price can cause black markets to develop. D) Rent controls are examples of price floors.
Congresswoman Gaga represents a state in which several firms manufacture furniture. She wants to impose tariffs on all imported furniture. Which of the following is the least likely consequence of such tariffs?
a. Domestic furniture buyers will lose consumer surplus, have less variety, and will pay higher prices. b. Domestic furniture producers will gain producer surplus. c. Domestic furniture producers will have a higher rate of technological advance. d. Domestic furniture producers will have more market power.
Positive externalities arise when
A) an unprofitable firm is shut down. B) a profitable firm is regulated. C) tax rates are reduced. D) production of a good generates benefits that spill over to third parties.