For a given nominal interest rate, a reduction in expected inflation will cause
A) a reduction in the real interest rate.
B) an increase in the real interest rate.
C) an increase in investment.
D) an increase in money demand.
B
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If smokers knew the information cigarette firms conceal about the negative externalities associated with cigarette smoking
a. the supply curve would shift to the right causing price to rise b. the supply curve would shift to the left causing price to fall c. the supply curve would shift to the left causing price to rise d. the demand curve would shift to the left causing price to fall e. the demand curve would shift to the right causing price to fall
When firms are said to be price takers, it implies that if a firm raises its price,
a. buyers will go elsewhere. b. buyers will pay the higher price in the short run. c. competitors will also raise their prices. d. firms in the industry will exercise market power.
Which of the following is an argument in favor of judging competitiveness by performance rather than structure?
A. Under the judgment by structure criterion, a firm may be breaking the law if it does what it's supposed to be doing: producing the best product it can at the lowest cost. B. Courts know little economic theory. C. Structure can be a predictor of future performance. D. Judgment by performance requires that each action of a firm be analyzed on a case-by-case basis, which is very time-consuming and expensive.
If the reserve ratio is raised, the money multiplier
A. stays the same. B. is doubled. C. is increased. D. is lowered.