How does a natural monopoly function?
a) A few firms are in perfect competition
b) Imperfect competition makes it difficult for firms to do business
c) a single firm supplies all the output
d) The government supplies all buyers with the product
Ans: c) a single firm supplies all the output
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Explain the Heckscher-Ohlin theorem
What will be an ideal response?
If the inflation rate is decreasing while unemployment is increasing: a. the short-run Phillips curve must have shifted right
b. the short-run Phillips curve must have shifted left. c. it must have involved a movement along the short-run Phillips curve d. it would be inconsistent with any possible Phillips curve scenario.
Answer the following statements true (T) or false (F)
1. In a market system, entrepreneurs start up businesses in order to earn a high salary. 2. In a market system, the income earned by owners of natural resources is called interest income. 3. A corporation is a type of business firm where the debt of the firm is considered its owners' personal responsibility. 4. According to the circular flow model of the market system, firms get their ability to pay for their costs of production from the revenues that they receive for their products.
Assuming all excess reserves are loaned out, if the reserve ratio is 8 percent, the money multiplier will be equal to:
A. 2. B. 8. C. 12.5. D. 16.67.