Which of the following encourages people to engage in activities that yield uncertain returns?
a. perfect information
b. economic profit
c. accounting profit
d. all of the above
B
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Can a firm achieve technological efficiency without achieving economic efficiency?
What will be an ideal response?
If fractional reserve banking exists, then:
A. banks need only keep a portion of each deposit on hand. B. the money multiplier is equal to 1. C. money cannot be created in the economy through banks. D. lending would be curtailed to nearly zero.
Using the Taylor rule, if inflation is 1 percent, desired inflation is 2 percent, and output is 2 percentage points below potential, the Fed should target a federal funds rate of:
A. 1.5. B. 6.5. C. 4.5. D. 2.5.
Explain why many mayors of cities facing the need to borrow for infrastructure improvements, may not look favorably on a large federal income tax rate reduction?
What will be an ideal response?