Many developing countries make the government budget one of the primary tools of long-run industrial development, with the government owning and operating industries such as steel mills, airlines, and phone companies
Indicate whether the statement is true or false
TRUE
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Targeting the federal funds rate allows the Fed some ability to control bank reserves and thus the money supply. Explain how each of the following tools allows the Fed to fine-tune its control of bank reserves
a. Conducting open market operations b. Changing the discount rate c. The ability to pay interest on reserves d. The Term Deposit Facility
The price elasticity of demand for a commodity is determined primarily by the
a. size of the consumer surplus. b. attractiveness of the substitutes for the good. c. incomes of consumers. d. availability of complementary goods.
Consider two firms competing to sell a homogeneous product by setting price. The inverse demand curve is given by P = 20 ? Q. Firm 1 has MC1(Q1) = 2 and firm 2 has MC2(Q2) = 2.25. Based on this information, we can conclude that the market price will be:
A. $2 and each firm will produce 9 units. B. $2.25 and each firm will produce 8.875 units. C. $2 and firm 1 will produce 18 units and firm 2 will produce 0 units. D. $2.24 and firm 1 will produce 17.76 units and firm 2 will produce 0 units.
In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by:
A. an increase in the cost of making donuts. B. an increase in the price of coffee. C. consumers expecting donut prices to fall. D. a change in buyer tastes.