Briefly explain the difference between the concepts of scarcity and shortage
What will be an ideal response?
Scarcity is not a shortage. Scarcity occurs when we cannot obtain all that we want at a zero price. We can eliminate a shortage but we cannot eliminate scarcity because it always exists as a result of limited resources relative to our unlimited wants.
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The expenditure approach for the calculation of GDP includes spending on:
a. consumption, investment, durable goods and exports. b. consumption, gross private domestic investment, government spending for goods and services, and exports. c. consumption, gross private domestic investment, government spending for goods and services, and net exports. d. consumption, net private domestic investment, government spending for goods and services, and net exports. e. consumption, gross private domestic investment, all government spending including transfer payments, and net exports.
When a firm in a price-taker industry is in long-run equilibrium, the market price equals
a. marginal cost but may be greater or less than average total cost. b. both average total cost and marginal cost. c. average total cost but may be greater or less than marginal cost. d. marginal revenue but may be greater or less than both average total cost and marginal cost.
Why are banks restricted in the assets that they can own? For example, why do you think banks are prohibited from owning common stock?
What will be an ideal response?
Answer the following questions true (T) or false (F)
1. If you purchase a share of stock from your friend who initially purchased the stock three years ago, your purchase of the stock represents a transaction in the secondary financial market. 2. Direct finance includes the sale by a corporation of stocks or bonds, but does not include borrowing money from a bank. 3. You purchase a share of Facebook stock from a friend who purchased the stock 1 year ago. Your purchase of the stock represents a transaction in the primary financial market.