After hiring a new employee, a manager finds that the total output has increased. When the manager hires another employee however, he realizes that although the total production has increased, the increment is less than the previous case. This is the result of:
a. diseconomies of scale.
b. a general economic downturn.
c. diminishing marginal returns.
d. the lack of skills of the two new employees.
e. constant returns to scale.
c
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What role can the government play in correcting problems of imperfect information?
What will be an ideal response?
What is the difference between demand and quantity demand?
A. Quantity demand is the directly related to a change in price. B. Quantity demand is a number while demand is the whole curve. C. Demand is inversely related to a change in price. D. Demand is a number while quantity demanded is the whole curve.
As a result of the Fed's actions during the 2008 financial crisis and banks' lending policies, the money multiplier ________ as a direct result of the ________
A) fell from about 9 to about 4; low risk experienced by banks because of the FDIC increasing their default coverage amounts B) decreased drastically; consistent decrease in banks' desired reserve ratios as they took on less risk C) rose from about 4 to about 9; surge in banks' desired reserve ratios as they took on less risk D) rose drastically; consistent decrease in banks' desired reserve ratios as they took on less risk E) fell from about 9 to about 4; surge in banks' desired reserve ratios as they took on less risk
Of the following methods that banks might use to reduce moral hazard problems, the one not legally permitted in the United States is the
A) requirement that firms keep compensating balances at the banks from which they obtain their loans. B) requirement that firms place on their board of directors an officer from the bank. C) inclusion of restrictive covenants in loan contracts. D) requirement that individuals provide detailed credit histories to bank loan officers.