Refer to the figure below. Suppose that the marginal benefit of writing a contract is $100 and the marginal cost of that contract is $150. Based on this information, the optimal contract length should be: 
A. increased by two-thirds.
B. held constant at the contract length where MB = 100 and MC = 150.
C. decreased.
D. increased by half.
Answer: C
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In the steady state, assuming that a constant share of the population is working,
A) both real GDP per worker and real GDP per capita will grow at the same rate. B) real GDP per worker will grow at a faster rate than real GDP per capita. C) real GDP per capita will grow at a faster rate than real GDP per worker. D) both real GDP per worker and real GDP per capita will remain constant.
Which of the following would shift a supply curve to the right?
a. Taxes b. Import restrictions c. Import duties d. Subsidies
A perfectly competitive industry is in long-run equilibrium. If demand for the product increases, we can expect the price of the good to:
A. rise at first and then fall. B. fall at first and then rise. C. rise and remain at the higher price. D. fall and remain at the lower price.
Answer the following statements true (T) or false (F)
1) An expansionary monetary policy is one that reduces the supply of money. 2) Changes in the interest rate are more likely to affect investment spending than consumer spending. 3) The job of the Fed in limiting the supply of money may be made more complex if commercial banks initially have substantial excess reserves. 4) When QE2 and Operation Twist were implemented, the Fed suspended its policy of forward commitment.