Economic analysis requires both mathematical reasoning and historical study
a. True
b. False
Indicate whether the statement is true or false
True
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The largest single portion of the federal budget is devoted to
A. national defense. B. Medicare and Medicaid. C. Social Security and unemployment compensation. D. education. E. interest payments on the national debt.
The rail system in Metropolis is a natural monopoly. If the government regulates the system by setting the fare equal to marginal cost, which of the following will be true?
a. The managers of the rail system will be allowed to adjust marginal cost so that they can get a normal rate of return on capital. b. The managers of the rail system will be allowed to adjust marginal cost so that they can get a fair profit. c. The rail system will earn economic profit at that fare. d. If the government doesn't give the rail system a subsidy to supplement revenue from fares, the system will face continuous economic losses. e. If the government doesn't give the rail system a subsidy to supplement revenue from fares, fare increases will push marginal cost upward.
The Federal Reserve is a privately operated commercial bank
a. True b. False Indicate whether the statement is true or false
Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000 . He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%. Abdul's annual explicit cost of capital is
a. $8,000. b. $4,000. c. $2,000. d. $1,000.