Board members act in the best interests of the firm:
A. when they take an extremely cautious approach to ratifying decisions.
B. because they are legally required to do so.
C. when they do not own stock in the firm.
D. because they wish to maintain a good reputation in order to be offered other board positions.
Answer: D
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In the long run, an increase in the aggregate price level:
A. doesn't change real output. B. decreases real output. C. increases real output. D. increases spending.
What are the inherent disadvantages of a barter system?
Which of the following is a reason to think that government action may not be valuable to improve market outcomes with asymmetric information?
a. The private market can sometimes deal with information asymmetries using signaling and screening. b. The government rarely has more information than the private parties. c. Government actions have their own imperfections. d. All of the above are correct.
Which of the following is the most accurate description of events when monetary authorities increase the size of commercial banks' excess reserves?
A. A fall in interest rates decreases the money supply, causing an increase in investment spending, output, and employment B. A rise in interest rates increases the money supply, causing a decrease in investment spending, output, and employment C. The money supply is decreased, which increases the interest rate, and causes investment spending, output, and employment to decrease D. The money supply is increased, which decreases the interest rate, and causes investment spending, output, and employment to increase