Real money demand in the economy is given by L = 0.3Y - 600i,where Y is real income and i is the nominal interest rate. In equilibrium, real money demand L equals real money supply M/P. Suppose that Y equals 2000 and the real interest rate is 5%.(a)At what rate of inflation is seignorage maximized?(b)What is the maximum amount of seignorage revenue?
What will be an ideal response?
| (a) | 47.5% |
| (b) | 135.375 |
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Suppose the refrigerator industry has an HHI of 2,500 while the aluminum industry's HHI is 6,850 . Is this information sufficient to conclude that the aluminum market is more concentrated than market for refrigerators? Explain your answer
What will be an ideal response?
Assume a group of firms has formed a cartel and the cartel is in engaged in joint profit maximization. As such, each firm, acting in its own interests, has an incentive to expand production up to the point at which:
A) its marginal cost equals the marginal revenue earned by the cartel. B) its marginal cost equals the cartel-determined price of the product being sold. C) its marginal revenue equals the cartel's marginal costs of production. D) its marginal cost equals the cartel-determined marginal revenue from the good being sold.
Different public goods can have different sized sharing groups, so efficiency would dictate _____
a. that only one national government is necessary b. that public goods be provided by the federal government and the states deal with externalities c. one world government for most pure public goods d. different public goods supplied at different levels of government
If the supply curve is perfectly inelastic and an excise tax is imposed
a. all of the tax is paid by buyers b. all of the tax is paid by sellers c. the market price will rise by the amount of the tax d. the market price will fall by the amount of the tax e. the tax is divided equally between buyers and sellers