In the long run, larger budget deficits lead to ________
A) higher saving levels
B) a fall in investment
C) lower interest rates
D) all of the above
E) none of the above
B
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If firms in a duopoly with homogeneous products compete on price, a Nash equilibrium is reached when each firm charges a price ________
A) equal to its average cost B) higher than its average cost C) equal to its marginal cost D) lower than its marginal cost
If Greece chose to abandon the euro and the Greek government decided to exchange euro bank deposits for drachmas, the affected bank depositors would experience gains if the
A) euro then appreciated. B) euro then depreciated. C) drachma then appreciated. D) drachma then depreciated.
Open-market operations are:
A. sales or purchases of government securities, by the Fed, to or from banks on the open market. B. regulations that set the minimum fraction of deposits banks must hold in reserve. C. operations that allow any bank to borrow reserves from the Fed at a special interest rate, called the discount rate. D. the purchase and sale of financial instruments on the open market.
In the short run, firms in monopolistically competitive markets
A. produce the output level where marginal revenue equals marginal cost. B. can earn economic profits. C. face a downward-sloping demand curve. D. All of these responses are correct.