Describe the basic motives for businesses to merge
What will be an ideal response?
Take advantage of synergies in operations: increase overall sales, reduce operating costs, lower costs of capital. Mutual acquisition of skilled managers, as each of the businesses may have skilled personnel that the other doesn't possess. Take advantage of favorable tax consequences. Increase market power so as to enhance economic profits. Diversify to reduce business risk. Increase the compensation of top executives, although this often is at the expense of stockholders and other employees.
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Checkable deposit account balances are
A) only a small component of the money supply. B) counted in the calculation of the money supply. C) part of M2 but not part of M1. D) considered credit, but not money.
Which of the following could prevent the opportunistic behavior of firms?
A) efficient contracts B) good reputation C) revealing relevant information about firms D) All of the above
An increase in wage rate, other things constant, shifts the aggregate supply curve downward
a. True b. False Indicate whether the statement is true or false
Some economists believe that permanently lower marginal income tax rates __________ the incentive to work and thus shift the __________
A) increase; LRAS curve to the right B) increase; AD curve to the right C) increase; SRAS curve to the left D) decrease; LRAS curve to the right E) decrease; AD curve to the left