Suppose there is a single market maker in this market. What is the optimal bid-ask spread?
a. $6 bid; $12 ask
b. $7 bid; $11 ask
c. $8 bid; $10 ask
d. $9 bid; $9 ask
a
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If the economy is initially in short-run equilibrium and then experiences a positive demand shock, real GDP will ________ relative to potential GDP and the real interest rate will ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
For a market to be considered perfectly competitive, there should be a minimum of 1,000 firms
Indicate whether the statement is true or false
In order for barter trades to occur, there must be a
a. singularity of interests. b. bargaining intermediary. c. double coincidence of wants. d. sufficient supply of cash.
Which scenario best exemplifies Gresham’s law?
a. Marla has faith in the value of paper money because she knows it can be exchanged for goods and services. b. Hiro prefers to invest his money rather than keep it in physical form or in a deposit account. c. Charlie does not trust banks, so he keeps all his money in the form of physical currency. d. Indira has silver coins she could use to make a purchase, but she prefers to use paper money.