The payment for current rather than future command over resources is
A. an implicit cost.
B. interest.
C. opportunity cost.
D. an implicit benefit.
Answer: B
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Economists classify energy and water as part of which factor of production?
A) land B) labor C) capital D) entrepreneurship E) land if undeveloped and capital if developed
A natural monopoly under rate of return regulation has an incentive to
A) pad its costs. B) produce more than the efficient quantity of output. C) charge a price equal to marginal cost. D) maximize consumer surplus.
Firms that participate in regular open market transactions with the Federal Reserve are called
A) Treasury banks. B) Federal Reserve partners. C) primary dealers. D) secondary market banks.
In the above figure, assume the economy is in equilibrium at point d. Then the Fed decreases the money supply so that the new aggregate demand curve is AD1. In the long run, the new price level will be
A) 100. B) 120. C) 130. D) 110.