Which statement is false?
A. Since some people choose to hold some of their currency, the deposit multiplier is lower than one divided by the reserve ratio.
B. In times of inflation banks are quite likely to carry excess reserves.
C. If banks choose to hold excess reserves; the deposit multiplier will be lower than expected.
D. If there is a large drain of dollars to foreigners because of a large trade imbalance, the deposit multiplier will be lower than expected.
B. In times of inflation banks are quite likely to carry excess reserves.
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In the mid-1990s, cattle ranchers in the United States kept raising cattle even though prices were at a ten-year low and below average total cost. What is the likely explanation for this?
A) The ranchers were hoping to receive government subsidies. B) The exit costs were too high. C) Continuing to operate resulted in smaller losses than would have been incurred by shutting down. D) Cattle is an important source of protein and its production is essential for the United States.
The distribution of surplus gained from private parties solving an externality problem on their own, as described by the Coase theorem, is dependent on:
A. who has more power to see to enforcement. B. which party has more negotiating power or wealth. C. where the initial rights of the parties lie. D. None of these statements is true.
If there is an increase in immigration into a specific labor market, then
A. The supply of labor shifts leftward, and the equilibrium wage will increase. B. The equilibrium wage will rise, and the quantity of labor hired will fall. C. The demand for labor will increase, and the equilibrium wage rises. D. The supply of labor shifts rightward, and the equilibrium wage will fall.
A decrease in the overall price level is
A. a price index. B. deflation. C. a recession. D. inflation.