The role of an assumption in an economic theory is to:
A. increase the scope of application.
B. simplify the theory.
C. add realism.
D. prove the theory.
Answer: B
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The money supply is $10 million, currency held by the nonbank public is $2 million, and the reserve—deposit ratio is 0.2. Bank deposits are equal to
A) $1.6 million. B) $2 million. C) $4 million. D) $8 million.
Marginal social costs are the sum of marginal private costs and incidental costs
a. True b. False Indicate whether the statement is true or false
An increase in the money supply will
a. increase interest rates, decreasing investment and aggregate demand. b. reduce interest rates, increasing investment and aggregate demand. c. reduce interest rates, decreasing investment and increasing aggregate demand. d. increase interest rates, increasing investment and aggregate demand.
Using the above table, the average product and marginal product when 4 workers are employed are
A. 13 and 13, respectively. B. 14 and 13, respectively. C. 13 and 9, respectively. D. 13 and 14, respectively.