Relating to the Economics in Practice on page 330: By not factoring in the external costs on society resulting from an environmental disaster caused by a specific firm, the firm will most likely ________ its product, and at equilibrium, the marginal social costs of production will be ________ the price.
A. underproduce; greater than
B. overproduce; greater than
C. underproduce; less than
D. overproduce; less than
Answer: B
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When a firm has earnings it has not yet paid out to the owners, those earnings are called
A) surplus capital. B) cash reserves. C) unearned income. D) retained earnings.
A rise in the real interest rate ________ consumption expenditure and ________
A) decreases; shifts the consumption function downward B) decreases; results in a movement downward along the consumption function C) decreases; shifts the consumption function upward D) increases; shifts the consumption function upward E) increases; shifts the consumption function downward
Suppose that the interest rate is so low that banks currently refuse to make loans. An increase in the supply of high-powered money will
A) have no effect on the money supply if all the new high-powered money ends up as bank reserves. B) have no effect on the money supply if all the new high-powered money ends up as cash in the hands of the nonbank public. C) raise the money supply depending on banks reserve-holding ratio. D) All of the above are correct.
One way the government can boost the economy out of a recession is:
A. with public announcements telling the public to save their money. B. by increasing government spending. C. by setting price ceilings on most goods so people can afford them. D. None of these will help an economy in recession.