Natural monopolies form when
a. small firms merge to form larger firms
b. one firm has control over the entire supply of a basic input required to produce the product
c. one firm's monopoly position is created and enforced by the government
d. one firm receives patent protection for certain basic production processes
e. long-run average cost declines as a firm expands output
E
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Say's Law can be succinctly restated as:
A. "In equilibrium, supply equals demand." B. "Supply creates its own demand." C. "The more things change, the more they stay the same." D. "If something cannot go on forever, it will stop."
Stocks are riskier for buyers because there is no commitment to pay dividends.
Answer the following statement true (T) or false (F)
Assume a simplified banking system subject to a 20 percent required reserve ratio. If there is an initial increase in excess reserves of $100,000 . the money supply:
a. increases $100,000 b. increases $500,000. c. increases $600,000 d. decreases $500,000.
The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.