If the cost of driving during specific times of the day increases, people will drive less during those times. This supports the basic economic notion that:
A. supply equals demand.
B. people respond to incentives.
C. marginal returns will diminish.
D. people are irrational.
Answer: B
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Suppose Bank A holds $200 of reserves, has deposits of $1000, and the desired reserve ratio is 20 percent. How many deposits can Bank A create?
A) zero, because Bank A has no excess reserves B) $200 C) $800 D) $400
Adam Smith's pin factory and Henry Ford's automobile assembly line are examples of
a. Product lines b. Functionally organized firms c. Inefficient processes d. In-line production
When will the difference between the actual deficit and the structural deficit be the largest?
a. in an inflationary gap b. at full employment c. at potential real GDP d. in a recession
Refer to the graphs below for a purely competitive market in the short run. The graphs suggest that in the long run, assuming no changes in the given information:
A. Some firms will exit from this industry
B. More buyers will come to the market
C. New firms will be attracted into the industry
D. Buyers will leave the industry