If total spending is less than total output, then price levels will
A. rise and production will increase.
B. rise and production will decrease.
C. fall and production will increase.
D. fall and production will decrease.
Answer: D
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Although originally its articulation may have been a mistake, the rule of reason has become a useful principle for interpreting antitrust law
Indicate whether the statement is true or false
Banks are firms who are in business, like butchers, bakers, and candlestick makers, to make profit. They accept deposits from savers and use those deposits to make loans to borrowers. The profit they make is
a. their excess reserves, remaining in the bank after loans are made b. regulated by the FDIC c. regulated by the Federal Reserve System d. the difference between the interest rate they pay to their borrowers and the interest rate they charge to their depositors e. the difference between the interest rate they pay to their depositors and the interest rate they charge to their borrowers
Why would it be a mistake to treat opportunity costs and explicit monetary costs as identical?
a. Because sometimes the market does not function well. b. Because opportunity costs are different for different goods. c. Because there are trade-offs involved in any decision. d. Because of existence of efficient markets.