In the figure above, if the market is a single-price monopoly rather than a perfectly competitive industry, the transfer of consumer surplus from consumers to the producer is the area of
A) trapezoid beic.
B) triangle abe.
C) rectangle begd.
D) rectangle befc.
D
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Assuming all excess reserves are loaned out, currency holdings by the public are zero, and a reserve ratio of 25 percent, an initial deposit of $3,000 will lead to a total increase in deposits of
A) $750. B) $2,250. C) $12,000. D) $36,000.
If the market for products produced by firms in a monopolistically competitive industry becomes ________, then there will be ________ firms and each firm will produce ________ output and charge a ________ price
A) smaller; fewer; less; higher B) smaller; more; less; higher C) smaller; more; less; lower D) smaller; fewer; less; lower E) smaller; fewer; more; higher
A person starting to drive more recklessly after signing a contract with an automobile insurance company is an example of
A) adverse selection. B) moral hazard. C) signaling. D) screening.
Figure 16-2
Assume that a contractionary monetary policy has shifted the aggregate demand curve in Figure 16-2 from D0D0 to D1D1. Fiscal authorities who wish to restore real GDP to the full-employment level will
a.
run a budget surplus by increasing taxes or cutting government spending.
b.
run a balanced budget to prevent the interest rate from rising and cutting off investment.
c.
run a budget deficit by cutting taxes or increasing government spending.
d.
ignore the change in monetary policy since it has no effect on fiscal policy.