In order to increase the money supply, the banking system must have which of the following?
What will be an ideal response?
Excess reserves
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Which of the following statements correctly identifies a similarity between network effects and economies of scale?
A) Both are related to costs incurred by a firm. B) Both act as barriers to entry in a market. C) Both act as disincentives to monopolies. D) Both are related to the number of consumers using a firm's product.
The franchising of fast-food restaurants would be an example of how a private business:
A. Overcomes market information problems B. Solves the moral hazard problem in insurance C. Expands the limits of the Coase theorem D. Corrects the problem of externalities
If markets are perfectly competitive, then the production of goods
A. will require government intervention. B. will use the least costly combination of resources. C. will always lead to business failures. D. will occur at an average total cost value that is above the minimum.
Perfect asset substitutability is the assumption that
A) the foreign exchange market is in equilibrium only when expected returns on domestic assets are greater than returns on foreign currency bonds. B) the foreign exchange market is in equilibrium only when expected returns on foreign currency bonds are greater than returns on domestic assets. C) the foreign exchange market is in equilibrium only when expected returns on all assets are negative. D) the foreign exchange market is in equilibrium only when expected returns on domestic assets are equal to returns on foreign currency bonds. E) the foreign exchange market is in equilibrium only when domestic assets are risk-free.