Large manufacturing firms that buy many different parts or components (e.g., auto manufacturers) can choose which parts to buy from other firms and which parts to make in their own factories
These manufacturers may be able to use monopsony power to reduce the price paid to outside suppliers for parts that are: A) standard components for many manufacturers so that there are many buyers and sellers.
B) only used in their cars so that there is one buyer and a few sellers.
C) bought and sold in perfectly competitive markets.
D) none of the above
B
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Explain what is meant by the economic principle of voluntary exchange
What will be an ideal response?
At the beginning of year one, there is no government debt outstanding. The government runs a $100 billion deficit in year one. Interest at a nominal rate of 10% must be paid starting in year two
Assume nominal GDP in year one is $2000 billion and the nominal growth rate of GDP is 4%. Assume the government balances its primary budget in the future and the interest rate and growth rate do not change. (a) What will be the government deficit in years two, three, four, and five? (b) What will be the value of government bonds outstanding at the end of the fifth year? (c) What will be the debt—GDP ratio at the end of year five?
When the cost of borrowing funds which is stated on a loan is adjusted for the effects of inflation, the resulting interest rate is called the
A) prime interest rate. B) nominal interest rate. C) real interest rate. D) core PCE interest rate.
The central problem that makes "economizing" necessary is
What will be an ideal response?