If a regulatory agency sets the price equal to marginal cost for a natural monopoly, the
A) government might have to provide a subsidy to the firm to keep it in business.
B) price is the same as the unregulated monopoly price.
C) firm makes an economic profit, though not the maximum economic profit.
D) firm makes the maximum economic profit.
E) firm makes zero economic profit.
A
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Ricardian equivalence is the proposition that
A) government expenditure should only be financed by taxes. B) it does not matter whether government expenditure is financed by creating new money or issuing debt. C) government expenditure should only be financed by issuing new debt. D) it does not matter whether government expenditure is financed by taxes or debt.
Under a floating rate system, exchange rates are determined by supply and demand in the foreign exchange market without government intervention
a. True b. False
Falling output, in the short run, could be due to:
A. a reduction in aggregate demand. B. an increase in short-run aggregate supply. C. an increase in long-run aggregate supply. D. an increase in aggregate demand.
In general, as a person includes fewer stocks and more bonds in his portfolio,
a. both risk and expected return rise. b. risk rises but expected return falls. c. risk falls, but expected return rises. d. both risk and expected return fall.