Why are public goods provided by the government, rather than by the private sector?
A) because they are large-scale projects that require the kind of financing only governments can generate through the issuance of bonds
B) because it would be difficult for a private sector firm to make a profit providing a public good, since consumers who benefit would not have to pay for it
C) because no one really benefits from public goods
D) because private sector firms do not have the foresight to plan for public goods
Answer: B
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The supplier of a factor of production has a reservation price of $100. The purchaser of the factor of production has a reservation price of $200. If the factor of production is unique, then:
A. a transaction will occur, and the price paid for the factor of production will be $150. B. a transaction will occur, and the price paid for the factor of production will be $100. C. there will be no transaction since $200 is greater than $100. D. a transaction will occur, and the price paid for the factor of production will be $200.
In practice, increases in government spending in an open economy can crowd out
A) net exports. B) consumption. C) investment. D) all of the above
The currency deposit ratio, c, is 0.10. The reserve requirement, rr, is 0.07. The excess reserve ratio, e, is 0.10. What is the size of the money multiplier?
A) 4.70
B) 4.07
C) 4.75
D) 4.00
If a company that drilled for and produced oil acquired a firm which refined oil into gasoline, this would be referred to as a
A. reverse merger. B. horizontal merger. C. vertical merger. D. conglomerate merger.