All the following are assumptions of the classical model EXCEPT
A) pure competition exists.
B) buyers and sellers react to nominal money prices rather than to relative prices.
C) wages and prices are flexible.
D) people are motivated by self-interest.
Ans: B) buyers and sellers react to nominal money prices rather than to relative prices.
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For barter to occur there must be
A) two people willing to pay with credit. B) a double coincidence of wants for each good to be exchanged. C) one person who pays cash. D) hyperinflation.
When scarce resources can serve only one user at a time in sequence, which method works well for allocating the scarce resources?
A) first come, first served B) lottery C) contest D) command system
How will the purchase of $100 million of government securities by the Federal Reserve change bank reserves and total checking account deposits in the banking system as a whole? Assume that banks do not hold any excess reserves, that households and
firms do not change the amount of currency they hold, and that the required reserve ratio is 20 percent.
What determines the position and shape of a society's production possibilities curve?
a. the physical resources of that society b. the level of technology of the society c. the number of factories available to the society d. all of the above