Monopolistic competition is a market structure characterized by many small firms selling a homogeneous product
a. True
b. False
Indicate whether the statement is true or false
False
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When a reward might not occur, economists incorporate the uncertainty by multiplying the reward by a:
A) positive factor more than 1. B) positive factor less than 1. C) negative factor more than -1. D) negative factor less than -1.
Which of the following is false?
a. In a liquidity trap, expansionary monetary policy will tend to increase the excess reserves in the banking system. b. If there are currently excess reserves in the banking system, in a liquidity trap, expansionary monetary policy will lead those excess reserves to be lent out by the banking system c. If there are no changes in the level of excess reserves held in the banking system as a result, both expansionary and contractionary monetary policy can successfully shift the money supply curve d. None of the above; all of the above are true.
Suppose that a firm produces electricity by burning coal. The production process creates a negative externality of air pollution. If the firm does not internalize the cost of the externality, it will produce where
a. the value of electricity to consumers equals the private cost of producing electricity. b. the value of electricity to consumers equals the social cost of producing electricity. c. the cost of the externality is maximized. d. the transaction costs of private bargaining are minimized.
Financial systems in market economies improve the allocation of saving in each of the following ways EXCEPT by:
A. evaluating the potential productivity of alternative capital investments. B. helping savers to share the risk of individual investment projects. C. allowing potential favoritism to determine which projects are funded. D. providing information about which potential use of funds will be most productive.