Figure 4-9



Moonshine" is illegal home brew made by adding sugar to accelerate corn fermentation. Ten pounds of sugar are necessary to make a gallon of moonshine. In the mid-1970s, the price of sugar tripled and the price of moonshine skyrocketed from $6 to $15 a gallon. Which graph in Figure 4-9 best illustrates this?



a.

1



b.

2



c.

3



d.

4


d

Economics

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The economy pictured in the figure has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 

A. recessionary; A B. recessionary; C C. recessionary; B D. expansionary; A

Economics

What is the role of the Federal Deposit Insurance Corporation?

a. To insure bank deposits b. To act as a lender of last resort c. To establish regulations for commercial banks d. To monitor the actions of commercial banks e. To insure the assets of commercial banks

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Financial intermediaries are

a. the same as financial markets. b. individuals who make profits by buying a stock low and selling it high. c. a more general name for financial assets such as stocks, bonds, and checking accounts. d. financial institutions through which savers can indirectly provide funds to borrowers.

Economics

Three of these are a condition for perfect competition.

a. Many buyers and sellers participate in the market. b. Sellers offer a wide variety of products. c. Buyers and sellers are well informed about products. d. Sellers are able to enter and exit the market freely.

Economics