When a bank borrows money from the Federal Reserve,
A. Reserves increase for the bank.
B. The ability to lend decreases for the bank.
C. This is a sign that the bank is insolvent.
D. Demand deposits increase for the bank.
Answer: A
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Suppose Julie plants a beautiful garden in her front yard. The benefits of the garden to Julie and to her neighbors equals the
A) external benefit. B) marginal private benefit. C) marginal external benefit. D) marginal social benefit. E) marginal social cost.
Aimee sells hand-embroidered dog apparel over the Internet. Her annual revenue is $128,000 per year, the explicit costs of her business are $42,000, and the opportunity costs of her business are $30,000. What is her economic profit?
A) $12,000 B) $56,000 C) $86,000 D) $98,000
Which of the following is NOT a characteristic of a perfectly competitive industry?
A) There is free entry and exit in the long run. B) The industry demand curve is downward sloping. C) Each firm produces the same homogeneous product. D) Economic profits must be positive in the short run.
Refer to the diagram. Which tax system will generate the largest cyclical deficits?
A. T 4 .
B. T 3 .
C. T 2 .
D. T 1 .