An industry's output is produced at the lowest possible cost when
a. firms' marginal costs are equal.
b. firms minimize their average costs.
c. all firms earn the same profit.
d. output is evenly divided among the industry's firms.
a. firms' marginal costs are equal.
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If a bank has $50,000 in excess reserves at the end of a business day and the required reserve ratio is 20 percent, the bank can increase its profits by: a. keeping the excess reserves
b. loaning out $40,000. c. loaning out $50,000 to another bank. d. borrowing $50,000 to remove the excess reserves. e. keeping $10,000 and depositing $40,000 with the Fed.
In the monetarist view, the money supply affects the economy
a. through investment spending and government spending. b. indirectly through interest rates. c. directly, apart from interest rates. d. by altering the size of the money multiplier.
Bank A holds $1 million in required reserves and the required reserve ratio is 9 percent. It follows that Bank A holds checkable deposit liabilities that total approximately
A) $111 million. B) $11.11 million. C) $90 million. D) $900 million.
Once a monopolistically competitive firm innovates, it is likely that:
A. it will need government protection to earn enough to cover its R & D costs. B. it will enjoy long-run profits. C. other firms will rush to create similar, highly substitutable goods. D. None of these is likely to happen.