An increase in the price level will _____
Fill in the blank(s) with the appropriate word(s).
decrease consumption because the value of net wealth will decrease.
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Suppose the proportion of deposits that individuals wish to hold as cash were to rise from 5% to 10%. Then,
A) the money supply will rise because people have more cash. B) bank deposits will fall by the same amount as if the reserve-holding ratio had risen by 5 percentage points. C) the supply of high-powered money will rise because cash has risen. D) the money supply will change by the same amount as if the reserve-holding ratio had risen by 5 percentage points.
Which of the following track the average prices received by producers?
What will be an ideal response?
Horizontal merger occurs when
A. two firms merge where each is about the same size. B. two firms merge where one had sold its output to the other as an input. C. the merger moves the combined firm onto the horizontal portion of its long-run average cost curve. D. two firms producing a similar product merge.
If a public service commission requires a natural monopoly to set its price equal to the long-run marginal cost, this will result in
A. normal economic profits to the monopoly. B. losses to the monopoly. C. either economic profits or losses, depending on the efficiency of the monopoly. D. excessive economic profits to the monopoly.