Why did it take the United States so long to get a central bank?
The political problems associated with the First Bank of the United States and Second Bank of the United
States were part of the reason. Opposition to central banking from southern and western agricultural
interests was another factor; farmers wanted cheap credit and enough inflation to reduce their debt over
time, which they were more likely to get with an unregulated banking system. Finally, federalism and the
power of the states was an important issue during the nineteenth century; states did not want to give that
much power to the central government.
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The equilibrium price in a market occurs where the:
A) market demand and the firms' average cost curves intersect. B) market supply and the firms' average cost curves intersect. C) market demand and the market supply curves intersect. D) market supply and the firms' revenue curves intersect.
When two firms in a perfectly competitive market seek to maximize profit in the long run, they eventually end up:
A) producing at a suboptimal level. B) minimizing total cost of production. C) earning the same level of profits. D) producing the same level of output.
Compare the scale of agricultural production in the advanced and devel-oping economies. In which is the percentage higher? In which is the total amount produced greater?
What will be an ideal response?
Refer to Figure 14.3. Suppose the economy is initially at long-run equilibrium and the Fed increases the target inflation rate, and to hit this rate, it must reduce the real interest rate. The economy then reaches a new, short-run equilibrium point
Assuming expectations are adaptive, the next movement is best represented as a movement from A) point C to point B. B) point C to point A. C) point D to point C. D) point B to point C.