Why is voluntary exchange an important source of economic prosperity?
A) All of the above are correct.
B) It makes it possible to produce a larger output as a result of gains from division of labor and specialization.
C) It makes it possible to produce a larger output as a result of lower per unit costs that often accompany large-scale production.
D) It moves goods from people who value them less to people who value them more.
A) All of the above are correct.
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Differentiate between the coordination problem and the incentive problem
What will be an ideal response?
The gap between the value a monopsony places on the last worker hired and the wage paid will increase when
A) the supply curve becomes more elastic at the optimum. B) the supply curve becomes less elastic at the optimum. C) the supply curve becomes horizontal. D) the value of the last unit of labor hired is greater than the cost.
Which of the following is included in M2? I. money market mutual funds II. small-denomination certificates of deposit
A) I only B) II only C) Both I and II D) Neither I nor II
If the economy is inflationary, the Fed would most likely:
A. increase bank reserves by raising the discount rate. B. increase bank reserves by buying government securities C. decrease bank reserves by lowering the discount rate. D. decrease bank reserves by selling government securities.