If the consumption of a good by one individual does not change the amount of the good available to others, the good is considered to be
a. durable.
b. nonrival-in-consumption.
c. a common good.
d. a natural resource.
B
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If the Fed buys a $1,000 U.S. government bond from a bank, it pays for it by giving the bank $1,000 in reserves—reserves that it simply creates out of thin air
a. True b. False Indicate whether the statement is true or false
For a monopolistically competitive firm in long run equilibrium: a. marginal revenue equals marginal cost and price equals average cost
b. the economic profits it is earning will soon be competed away by entry. c. accounting profits are zero and price equals marginal cost. d. marginal revenue equals marginal cost and average total cost is minimized.
Monetization of the deficit (or debt) means that
a. the government uses monetary policy to control the economy rather than fiscal policy. b. inflation accounting corrects for price increases. c. the Fed buys newly issued debt and increases the money supply. d. the amount of money in circulation is equal to the size of the debt.
If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos rises?
a. Both the equilibrium price and quantity would increase. b. Both the equilibrium price and quantity would decrease. c. The equilibrium price would increase, and the equilibrium quantity would decrease. d. The equilibrium price would decrease, and the equilibrium quantity would increase.