The equilibrium in the market for loanable funds is:
A. at the interest rate set by the Fed.
B. at the price at which the quantity supplied is slightly greater than quantity demanded.
C. where the amount being borrowed and the amount being saved is the same.
D. where the amount being saved is enough for banks to cover required reserves.
C. where the amount being borrowed and the amount being saved is the same.
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Why is the following statement incorrect: "A tax on all consumption goods is efficient because it equally taxes all goods and therefore does not distort their prices."
What will be an ideal response?
Doctors find that one aspirin per day reduces the risk of heart attacks. Demand for aspirin will
A) increase, so that equilibrium price and equilibrium quantity will increase. B) decrease, so that equilibrium price and equilibrium quantity will increase. C) increase, so that equilibrium price will decrease and equilibrium quantity will increase. D) increase, but the new equilibrium price and quantity are indeterminate.
What is producer surplus? What does producer surplus measure?
What will be an ideal response?
The Coase theorem states that, in the presence of cost externalities, an optimal equilibrium can be attained
A) with government taxation. B) by prohibiting production. C) by correctly defining property rights and through negotiation between the parties. D) None of the above