Prior to October 2008, commercial banks tended to hold relatively small amounts of excess reserves because
A. the presence of such reserves tends to boost interest rates and reduce investment.
B. the Fed constantly uses open market operations to eliminate excess reserves.
C. the Fed did not pay interest on reserves.
D. the Fed does not want commercial banks to be too liquid.
C. the Fed did not pay interest on reserves.
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If a natural monopoly is told to set price equal to average cost, then the firm
A) is not able to set marginal revenue equal to marginal cost. B) automatically also sets price equal to marginal cost. C) will make a substantial economic profit. D) will incur an economic loss. E) sets a price that is lower than its marginal cost.
Which of the following is a problem inherent in centrally planned economies?
A) Production managers are more concerned with satisfying consumer wants than with satisfying government's orders. B) There is too little production of low-cost, high-quality goods and services. C) Exports tend to exceed imports. D) Households and firms make poor decisions in choosing how resources are allocated.
Which of the following is the primary issue in the tragedy of the commons?
a. Overharvesting common resources b. Selling too many common resources c. Running out of natural resources d. Lacking funds to protect natural resources
Sue earns income of $80,000 per year. Her average tax rate is 50 percent. Sue paid $5,000 in taxes on the first $30,000 she earned. What was the marginal tax rate on the first $30,000 she earned, and what was the marginal tax rate on the remaining $50,000?
a. 6.25 percent and 50.00 percent, respectively b. 10.00 percent and 70.00 percent, respectively c. 16.67 percent and 60.00 percent, respectively d. 16.67 percent and 70.00 percent, respectively