The area above the supply curve and below the market price represents:
a. the consumer surplus
b. the producer surplus.
c. the deadweight loss of the producer.
d. the deadweight loss of the consumer.
B
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One purpose of discretionary fiscal policy is to
A. increase government spending during a recession. B. reduce inflation during an expansion. C. reduce inflation during a recession. D. increase taxes during an expansion.
Assuming a simple Keynesian multiplier, and given an increase in planned investment of $100 billion, the effect on total output will be greater than $100 billion only if the
A) MPS is greater than zero. B) MPC is zero. C) MPS is less than zero. D) MPC is greater than one.
Increases in interest rates
A) reduce borrowers' net worth. B) reduce lenders' net worth. C) increase the present value of borrowers' assets. D) raise the cost to businesses of internal funding.
Alan puts $20,000 in an uninsured savings account at the Boston National Bank. Susie borrows $20,000 from the Boston National Bank, flies to a Central African country, and is never heard from again. Which of the following is true in this case? a. Alan will lose her $20,000
b. Alan will lose her $20,000 if she and Norma are related. c. Alan will lose her $20,000 if the First National Bank makes all of its loans to people who run off to South Pacific islands. d. Alan will not lose her $20,000 no matter what happens to the First National Bank. e. Alan will not lose her $20,000 unless the Fed fails