If we look back in history, why has the role of creating money fallen to central banks?
What will be an ideal response?
Historically central bank money has been seen as more trustworthy than the money issued by emperors, kings or queens. Often times rulers would have a strong incentive to default on their notes (debts) rendering the currencies they issued as worthless. Early central banks on the other hand, kept adequate reserves (usually gold) to redeem their notes.
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Oligopolists merge to ________
A) increase market supply B) increase market demand C) increase market power D) reduce prices
If the incentive to take advantage of a conflict of interest is high
A) removing the economies of scope that created the conflict may induce higher costs because of the decrease in the flow of reliable information. B) then the government must step in to remove the conflict. C) the costs of non-action in removing the conflict will always be higher than the cost of removing the conflict. D) firms will always step in and work to remove the conflict.
When a positive externality is present in a market, the quantity consumed:
A. is always more than the socially optimal quantity. B. is the same as the socially optimal quantity. C. is often more than the socially optimal quantity. D. is less than the socially optimal quantity.
Nonsmoking sections in restaurants are designed to
a. prevent third parties from causing a market failure b. increase demand by achieving market equilibrium c. prevent free riders from incurring a negative externality d. prevent third parties from incurring a negative externality e. achieve market equilibrium which cannot be achieved without the designated sections