If in order to sell its bonds the government raises interest rates on the bonds it offers, financing government spending by public debt, it
a. may end up crowding out private investment and slowing economic growth in the private sector
b. may end up crowding out public investment and increasing economic growth in the private sector
c. may slow down inflation and maintain economic growth
d. makes it cheaper for private industry to finance its own investment
e. will convert deficits to surpluses but at the expense of stable prices
A
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Chicken and fish are substitutes. Therefore, the cross elasticity of demand between chicken and fish is
A. negative. B. positive. C. zero. D. Any of the above is possible.
When investment bankers underwrite new stock, they
A) sell them on one of the stock exchanges. B) auction them off to the public. C) sell them to commercial banks who in turn find buyers. D) place them with ultimate investors and some intermediaries throughout the country.
The marginal rate of substitution is
A) the change in the quantity of one good that just offsets a one unit change in the consumption of another such that the total satisfaction remains constant. B) the additional satisfaction from consuming an additional unit of a good or service. C) positively related to the level of income. D) the set of goods and services that are available to the consumer given his income.
The long-run equilibrium of a monopolistically competitive firm is characterized by
A) a tangency of the average total cost curve with the firm's demand curve. B) price equal to marginal cost. C) production at the minimum point of the firm's average total cost curve. D) production at the minimum point of the firm's average variable cost curve.