The money supply is $6 million, currency held by the nonbank public is $2 million, and the reserve-deposit ratio is 0.1. The monetary base is equal to
A. $2.4 million.
B. $4 million.
C. $2 million.
D. $2.6 million.
Answer: A
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The reduction in private borrowing that is caused by an increase in government borrowing is called:
A. the crowding out effect. B. surplus investment. C. the dissaving effect. D. the savings effect.
If the price of a product is $12, its average total cost is $2 and its average total cost is $15 at the profit-maximizing output level, in the short run the firm:
A. should expand output until MR = MC. B. cannot cover total fixed costs. C. experiences a loss. D. must always shut down.
Land used to grow corn can also grow soybeans. As the demand for corn used in ethanol began to increase the price of corn, what happened to the price of soybeans?
A) The price of soybeans fell due to lower demand for soybeans. B) The price of soybeans rose since farmers began planting corn instead of soybeans, thus decreasing the supply of soybeans. C) The price of soybeans rose since they were in limited supply and demand increased. D) The price of soybeans stayed the same, since subsidies made up for any difference in the price between corn and soybeans.
Suppose that a firm operating in perfectly competitive market sells 400 units of output at a price of $4 each. Which of the following statements is correct? (i) Marginal revenue equals $4. (ii) Average revenue equals $100. (iii) Total revenue equals $1,600
a. (i) only b. (iii) only c. (i) and (iii) only d. (i), (ii), and (iii)