The cost of using capital is equal to the market rental price as long as:
A. a firm rents all of the capital used in its production process.
B. a firm owns all of the capital used in its production process.
C. the cost of capital is expensed in the year the capital is purchased.
D. a well-functioning rental market for capital exists.
D. a well-functioning rental market for capital exists.
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Explain how price can be a regulator, that is, how it can coordinate the plans of buyers and sellers
What will be an ideal response?
If the economy is in an inflationary boom, the Fed would most likely
a. encourage banks to provide loans by buying government securities. b. encourage banks to provide loans by raising the discount rate. c. encourage banks to provide loans by selling government securities. d. restrict bank lending by selling government securities. e. restrict bank lending by lowering the federal funds rate.
If we observe that a consumer's budget constraint has shifted inward, we can assume that the consumer will buy
a. fewer normal goods and more inferior goods. b. more normal goods and fewer inferior goods. c. more normal goods and more inferior goods. d. fewer normal goods and fewer inferior goods.
Economists agree that corporations always shift the corporate income tax to consumers by raising product prices.
Answer the following statement true (T) or false (F)