The socially efficient level of output is determined where:
a. marginal social cost equals marginal social benefit.
b. marginal private cost equals marginal social benefit.
c. average social cost equals average social benefit.
d. average private cost equals average social benefit.
a
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The above figure shows the U.S. market for 1 carat diamonds. With free trade, Americans buy ________ diamonds and pay a price of ________ per diamond
A) 300,000; $4,000 B) 500,000; $4,000 C) 700,000; $3,000 D) 300,000; $3,000 E) 900,000; $2,000
Which of the following statements would be true of an economy that can be characterized as being to the left of the IS curve?
A) There is an excess demand for commodities at the existing interest rate. B) There will be a tendency for the level of output to decrease. C) There is an excess supply of commodities at the existing interest rate. D) There will be a tendency for interest rates to fall.
The easiest way to create greater income equality is to _____
a. raise everyone's income by the same percentage b. raise everyone's income by the same amount c. raise the incomes of the poor d. lower the incomes of the rich
Assume the Fed purchases $5,000 worth of U.S. Treasury bonds from Bill Gates, who promptly deposits the money in Microsoft Rules National Bank. Assuming that the required reserve ratio is 25 percent and banks keep zero excess reserves, then the money supply will ultimately:
a. increase by a maximum of $5,000. b. increase by a maximum of $20,000. c. decrease by a maximum of $5,000. d. decrease by a maximum of $20,000.