If the stock market crashes, then
a. aggregate demand increases, which the Fed could offset by increasing the money supply.
b. aggregate demand increases, which the Fed could offset by decreasing the money supply.
c. aggregate demand decreases, which the Fed could offset by increasing the money supply.
d. aggregate demand decreases, which the Fed could offset by decreasing the money supply.
c
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What are some of the common arguments against free trade?
What will be an ideal response?
Joe sold gold coins for $1,000 that he bought a year ago for $1,000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money because he could have received a 3 percent return on the $1,000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of:
A. opportunity costs.
B. marginal benefits that exceed marginal costs.
C. imperfect information.
D. normative economics.
A firm that makes zero economic profits
A. Covers all its costs, including a provision for normal profit. B. Incurs an accounting loss if fixed costs are greater than variable costs. C. Must eventually go bankrupt and exit the industry. D. Does not cover its variable costs and should shut down in the short run.
When the rate of inflation is decreasing, this economic condition is called:
A. Disinflation B. Depreciation C. Stagflation D. Deflation