If banks choose to hold excess reserves
A. Lending decreases, and the money supply decreases.
B. Lending increases, and the money supply increases.
C. Lending decreases, and the money supply increases.
D. None of these.
Answer: A
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The tax multiplier is negative because increases in taxes lead to decreases in consumer spending
Indicate whether the statement is true or false
What is one potential problem with offering a choice of contracts to two different employees?
A) If Employee A is paid more than Employee B, Employee A might sue for discrimination. B) Employee A might be paid less than Employee B, proving statistical discrimination. C) The two employees might compare salaries without comparing risk-preferences, thereby running the risk of jealousy or claims of discrimination. D) The two employees might compare risk preferences without comparing salaries, thereby running the risk of jealousy or claims of discrimination.
?Hair Pins /hourBandanas /hourNigel410Mia93
Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel's and Mia's hourly productivity are shown in Table 18.3. Which of the following is TRUE?
A. Mia has an absolute advantage in producing hair pins but not bandanas. B. Mia has an absolute advantage in producing bandanas but not hair pins. C. Mia has an absolute advantage in producing both goods. D. Mia does not have an absolute advantage in producing either good.
Economists who are cautious about government intervention in health care markets are probably worried about each of the following EXCEPT
A. excessive flexibility. B. rent-seeking behavior. C. the incentive problem. D. lack of innovation.