What happens to the market outcome if cartel members cheat on the collusive agreement?
A) Price declines, but firm-level quantities remain the same because the firms act like price takers
B) Price and quantity revert to the single-seller monopoly equilibrium outcome
C) Other firms raise prices so that the average market price remains unchanged
D) Price declines and quantity increases toward the perfectly competitive equilibrium
D
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Which of the following is a correct reason for stating that the United States has a fiduciary monetary system?
I. Our money is convertible to a fixed amount of silver or gold. II. Our money has a predictable value. A) I only B) II only C) Both I and II D) Neither I nor II
Suppose the U.S. government encouraged new teachers to take jobs in underperforming schools by paying the new teachers a $20,000 bonus. These teachers would be exemplifying the economic idea that
A) people are rational. B) people respond to economic incentives. C) equity is more important than efficiency. D) optimal decisions are made at the margin.
Which of the following is a valid concern about federal budget deficits?
a. The welfare of future generations will be directly related to the per-capita size of the national debt that they inherit. b. Growth of the national debt will eventually lead to the bankruptcy of the government. c. When the debt comes due, future generations may be unable to pay it off. d. If the increases in the national debt reduce private expenditures on capital formation, aggregate demand is reduced.
Banks can increase the supply of money
A. only by increasing the currency in the hands of the public. B. only by increasing the checking deposits held by the public. C. by increasing both the currency and the checking deposits in the hands of the public. D. neither by increasing the currency nor the checking deposits in the hands of the public.