Ceteris paribus, the amount of required reserves decreases when the dollar volume of transactions accounts increases.
a. true
b. false
b. false
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The two deadweight triangles are the Consumption distortion and Production distortion losses. It is easy to understand why the Consumption distortion constitutes a loss for society
After all it raises the prices of goods to consumers, and even causes some consumers to drop out of the market altogether. It seems paradoxical that the Production distortion is considered an equivalent burden on society. After all, in this case, profits increase, and additional production (with its associated employment) comes on line. This would seem to be an offset rather than an addition to the burden or loss borne by society. Explain why the Production distortion is indeed a loss to society, and what is wrong with the logic that leads to the apparent paradox.
Suppose there are two countries (Home and Foreign) that produce two goods. Home's wages are 100% greater than Foreign's wages. Will trade be possible between Home and Foreign?
a. No, because Foreign's wages are lower than Home's wages. b. Yes, Foreign will be able to export both products to Home. c. Yes, as long as Home's marginal productivity of labor in one product is at least 100% higher than Foreign's marginal productivity of labor in the same product. d. No, because prices will be the same in each country.
Refer to the graph shown. The economy begins at a level of output of $50 billion and experiences a one year recession in which output declines by 3 percent. What is output in year 1?
A. $51.5 billion B. $48.5 million C. $15 billion D. $1.50 billion
An increase in the productivity of labor over time will:
A. Decrease the value of time B. Increase the value of time C. Decrease the demand for labor-saving devices D. Decrease the demand for consumer goods and services