______ and ______ are explanations of how things work that help us understand and predict how and why economic agents such as consumers, producers, firms, government, and so on behave the way they do.
a. Correlations; models
b. Theories; models
c. Theories; aggregates
d. Correlations; aggregates
b. Theories; models
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When the Fed wants to lower the federal funds rate, it ________.
A. increases the reserve requirement B. increases the prime rate C. buys bonds from banks and the public D. increases the discount rate
Under which of the following is consumer surplus zero?
A) all types of monopoly B) only single-price monopoly C) only perfectly price-discriminating monopoly D) only price discrimination on the basis of the number of units purchased E) perfect competition
Although the reciprocal nature of the problem suggest that the proceeds of a corrective tax not be paid to as compensation to those harmed, if compensation is paid to those harmed by externalities _____
a. the payment should be made from general revenues to keep the corrective action separate from the compensatory part b. the payment should be set equal to marginal external cost c. the payment should be made in one lump sum to minimize incentives to create future problems d. the payment should be double the amount of the corrective tax to justly compensate the victims
Explicit agreements between businesses to keep prices high:
A. are illegal. B. are not in the public's best interests. C. are called collusion. D. All of these statements are true.