An asset price "bubble" is often supported by
A. borrowed money.
B. sellers with irrationally pessimistic price expectations.
C. buyers with irrationally pessimistic price expectations.
D. politicians with insatiable appetites for capital gains tax revenues.
Answer: A
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The Fed first announced an inflation target of 2% in
A) 1979. B) 2005. C) 2012. D) 2015.
The socially optimal level of output of a good with an externality occurs when
a. the marginal private costs of production are equal to marginal private revenues b. the firm maximizes its profits c. the consumer maximizes his or her utility d. the marginal social cost of production equals the marginal social benefit of the good e. the firm is making a normal profit
Which of the following is an implication of the classical model?
a. The supply of loanable funds curve is downward sloping. b. The inflation rate is constantly rising. c. Fiscal policy only changes the amount of consumption, investment and government spending, not the amount of output produced. d. Monetary policy can change both the interest rate and real output. e. The interest rate can only be changed by monetary policy, not by changes in government spending.
If a firm sells 200 units of output at $15 per unit and 210 units of output when price is reduced to $14, its marginal revenue from selling the last unit is
A) $60. B) $210. C) $294. D) -$60.