Why is the money multiplier smaller than the simple deposit multiplier?
What will be an ideal response?
In the case of the money multiplier, individuals may hold some of their assets in cash rather than depositing them in a checking account and banks may hold excess reserves. The simple deposit multiplier assumes all assets are deposited into banks and banks do not hold excess reserves.
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Stocks are riskier for buyers because there is no commitment to pay dividends
a. True b. False Indicate whether the statement is true or false
Why is it difficult for economists to predict the price and output policy that will emerge in oligopolistic markets?
a. Economists cannot determine if barriers to entry exist in a market. b. Economists cannot predict the reactions that firms will have to the actions and decisions of other firms. c. The government prevents economists from acquiring the information that would lead to good predictions. d. Firms have a set price and output policy, but the policy is concealed to discourage competition.
Why might equipment costs be short-run costs in one business but long-run costs in another?
a. The size and complexity of a business contributes to the nature of its capital costs. b. Companies in business for a long time have established credit with equipment vendors. c. Some equipment is poorly made and does not last through longer production runs. d. Equipment is a variable input that is not affected by output or length of production.
You own a local sub shop in a college town. You primarily serve two groups of people: local residents (both students and other local residents) and visitors to your town. Devise a price discrimination strategy that will increase your revenues compared to a single-pricing strategy.
What will be an ideal response?