The idea that what’s good for one person may not be good for all people is known as the
a. cause-effect fallacy.
b. fallacy of composition.
c. moral hazard problem.
d. disequilibrium position.
b. fallacy of composition.
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According to this Application, which of the following is a reason for holding cash?
A) for convenience B) fear of financial catastrophe C) to make a purchase when you cannot use a debit or credit card D) all of the above
If aggregate planned expenditures exceed real GDP, then
A) inventories increase above their planned levels and businesses decrease their production. B) inventories decrease below their planned levels and businesses decrease their production. C) there is no equilibrium level of real GDP. D) unplanned inventory changes equal zero. E) inventories decrease below their planned levels and businesses increase their production.
Monopolistically competitive firms
a. are guaranteed to earn short-run economic profit b. may earn short-run economic profits, although long-run economic profit is typically zero c. may earn economic profit both in the short run and in the long run d. earn zero economic profit both in the short run and in the long run e. can only earn an economic profit in the inelastic portion of their demand curves
If the Fed wants to increase bank reserves, it can:
A. Buy bonds. B. Raise the discount rate. C. Raise the reserve requirement. D. Sell bonds.