A firm's level of investment is tied to the interest rate
a. only when the firm has to borrow funds to buy capital
b. only when the firm has to borrow funds to buy stocks
c. only when the firm already has the funds and could lend them
d. because the interest rate represents the opportunity cost of investing in capital
e. because investments are always made with borrowed funds
D
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Refer to Figure 5-9. Let's suppose the government imposes a tax of $50 per unit of toilet paper to bring about the efficient level of production. What happens to the market price of toilet paper?
A) It rises by more than $50 per unit. B) It rises by $50 per unit. C) It rises by less than $50 per unit. D) It remains the same because the tax is imposed on producers who create the externality.
A relatively steep LM curve implies that wide fluctuations in the goods sector cause
A) wide fluctuations in real output. B) wide fluctuations in the price level. C) wide fluctuations in the interest rate. D) crowding out of private investment.
Who owns the Fed?
a. The federal government. b. The states. c. The District Federal Reserve Banks. d. All banks. e. Member banks.
If average total cost per unit is minimized when a single producer supplies the entire market, this indicates
a. the presence of limit pricing b. that the single producer is a perfect monopoly c. the presence of substantial economies of scale d. that the market has been narrowly defined e. the existence of a single-price monopoly