According to the cost-benefit principle if a change generates $50,000 in gains and $45,000 in losses,
A) it is desirable.
B) the gain is not large enough to justify the change.
C) the desirability depends on who gains and who loses.
D) it is a Pareto improvement.
A
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Constant returns to scale (CRS) implies that when the firm ________
A) doubles all inputs, output more than doubles B) doubles all inputs, output doubles C) doubles all inputs, output increases by less than 100 percent D) doubles all inputs, output remains constant E) none of the above
Suppose the money growth rate is 3 percent, velocity is constant, and price level is growing at 2 percent. What is the growth rate of real GDP?
What will be an ideal response?
Suppose that bank reserves (res) are a function of the nominal interest rate (i): res = 0.3 - 3i.The money multiplier is (cu + 1)/(cu + res), where cu is the currency-deposit ratio. Initially, suppose the real interest rate (r) equals 0.03, the expected inflation rate (pe) equals 0.03, and the currency-deposit ratio equals: cu = 0.4 - (10 × pe).The real money demand function is L(Y,i) = 0.8Y - 1500i, where Y is the level of output. The monetary base equals 100. The price level equals 1.0 initially and will not change in the short run, but will adjust in the long run.(a)Calculate the currency-deposit ratio, the reserve-deposit ratio, the money multiplier, the money supply, and the equilibrium level of output. Assume that this level of output equals full-employment output, so
you are assuming that the economy is in general equilibrium with the price level equal to 1.0. Show your work.(b)Suppose financial innovation causes the reserve-deposit ratio to decline to res = 0.2 - 3i. Calculate the new currency-deposit ratio, the reserve-deposit ratio, the money multiplier, the money supply, and the equilibrium level of output in the short run, assuming a Keynesian model with the price level fixed in the short run. Show your work.(c)Calculate the equilibrium price level in the long run. Show your work. What will be an ideal response?
Sarah initially used her cell phone mostly to make important business calls
However, when she was informed that henceforth her phone bills would be reimbursed by her employer, she started using her cell phone to make frequent calls to her friends and relatives. This behavior is an example of ________. A) moral hazard B) a negative externality C) the prisoners' dilemma D) the free-rider problem