Even-handed enforcement of contracts fuels economic prosperity because it
a. permits individuals to invade or infringe on the property rights of others.
b. increases transaction costs.
c. increases market uncertainty and the probability of contract violations.
d. promotes gains from trade by keeping transaction costs low.
d. promotes gains from trade by keeping transaction costs low.
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Suppose that firms in a monopolistically competitive industry are earning positive economic profits. In this situation, you would expect
A. the number of firms in the market to increase. B. each firm will experience an increase in its demand. C. there is a downward shift in the firm’s average cost curve. D. to observe firms reducing their advertising.
If a bank had demand deposits of $80 million and it faced a 25 percent required reserve ratio, it would be required to have how many reserves?
a. $20 million b. $40 million c. $60 million d. $80 million
The growth rate of potential GDP depends on
a. the rate of technical progress. b. the growth rate of the capital stock. c. the growth rate of the labor force. d. all of the above.
Suppose that in the United States, the opportunity cost of producing a motor engine is 4 auto bodies. In Canada, the opportunity cost of producing a motor engine is 2 auto bodies
a. What is the opportunity cost of producing an auto body for the United States? b. What is the opportunity cost of producing an auto body for Canada? c. Which country has a comparative advantage in the production of auto bodies? d. Which country has a comparative advantage in the production of motor engines?