Economists assume that individuals make informed decisions and act in their own self-interest
Indicate whether the statement is true or false
TRUE
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Which of the following statements is FALSE?
A) Total income is always greater than total output. B) In the circular flow model, households sell factor services to businesses in return for factor payments. C) Businesses sell goods and services to households who use their income to pay for them. D) The value of total income is equal in value to total output because profit is a cost of production.
According to the equation of exchange, if the quantity of money is $20 billion, velocity 3, and real GDP is $6 billion, then the price level is
A) 10. B) 1.1. C) 2. D) 1.6. E) 40.
When the firm produces the quantity that sets marginal revenue equal to marginal cost, a perfectly competitive firm is
A) determining the price it will set. B) maximizing its revenues. C) maximizing its profit. D) establishing its shutdown point.
Assume a bank has $200 million of assets with a duration of 2.5, and $190 million of liabilities with a duration of 1.05. If interest rates increase from 5 percent to 6 percent, the net worth of the bank falls by
A) $1 million. B) $2.4 million. C) $3.6 million. D) $4.8 million.