Refer to Scenario 9.9 below to answer the question(s) that follow. SCENARIO 9.9: Sponsors invest $250,000 in a new greeting card business on the promise that they will earn a return of 10% per year on their investment. The business sells 52,000 greeting cards per year. The fixed costs for the business include the return to investors and $79,000 in other fixed costs. Variable costs consist of wages ($1,000 per week) plus materials, electricity, etc. ($3,000 per week). The business is open 52 weeks per year.Refer to Scenario 9.9. The business is earning exactly a normal profit. Thus, the average price per greeting card must be
A. $1.52.
B. $2.
C. $4.
D. $6.
Answer: D
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Reserve demand becomes horizontal at the IOER rate because:
A. the reserve supply is always set by the Fed so that the federal funds rate is greater than the IOER rate. B. banks will not make loans at less than the IOER rate. C. banks must earn more than the IOER rate to lend. D. the IOER rate is the upper bound of the target federal funds rate
Which of the following applies to the tragedy of the commons? I. In the absence of government action, there is an absence of incentives to prevent the overuse of the common resource. II
When consumers take account of the marginal social benefit and marginal social cost, overuse of the resource occurs. III. Even with government action, it is impossible for an efficient level of output to be achieved. A) I only B) I and II C) II and III D) I, II and III
If government increases taxes by the same amount it increases government spending, there will be no effect on aggregate demand: the increase in government spending is offset by an equal decrease in consumption spending by households
Indicate whether the statement is true or false
Which of the following expressions is correct?
A) B = + BR B) BR = + B C) = B + BR D) = -BR - B