Refer to the given graph. A movement from b to a along C 1 might be caused by a(n):
A. recession.
B. wealth effect of an increase in stock market prices.
C. decrease in income tax rates.
D. increase in saving.
A. recession.
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What is the main role of a bank?
A. Serve as an intermediary between savers and borrowers B. Hold money in a safe for customers C. Invest in businesses D. Give out loans to customers
The creation of private property rights corrects negative externality problems in many cases because they
a. cannot create negative externalities b. create a strong incentive for the private owners to maintain the property c. can force the government to compensate the owners for the externality costs d. encourage people to become free riders e. always lead to the social optimal price and output levels
Refer to Figure 22.3 for a perfectly competitive firm. At a market price of $23, total profits are maximized at an output of
A. 31. B. 13. C. 39. D. 25.
The interest rate effect suggests that
A. an increase in the price level will, reduce interest rates, and therefore reduce consumption and investment spending. B. an increase in the price level will, increase interest rates, and therefore reduce consumption and investment spending. C. nominal interest rates do not accurately measure the yield on loans unless adjusted by use of a price index. D. a decrease in the real interest rate will stimulate consumption and investment spending and therefore inflate the price level.