The Fed can raise the discount rate when it wants to:
A. decrease the money supply.
B. increase the money supply.
C. decrease the budget deficit.
D. increase the budget deficit.
Answer: A
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Total surplus is
a. equal to consumer surplus minus producer surplus. b. equal to the total value to buyers minus the total cost to sellers. c. equal to consumers' willingness to pay plus producers' cost. d. greater than the sum of consumer surplus plus producer surplus.
The unwillingness of individuals to share in the cost of a public good is called the:
A. volunteer problem. B. social conscience problem. C. public choice problem. D. free rider problem.
Exhibit 10-2 A monopolistic competitive firm
If all firms in a monopolistic competitive industry have demand and cost curves like those shown in Exhibit 10-2, we would expect that in the long run:
A. all firms will leave the industry. B. some firms will leave the industry. C. firms in the industry earn zero economic profits. D. a number of new firms will enter the industry.
Profit-maximizing businesses will buy more new machinery only if:
A. The interest rate increases B. Labor costs are low and expected to fall C. The expected rate of return of the new machinery is greater than the interest rate D. The present value of the new machinery is lower than its purchase price