Which of the following is true in markets where price controls are applied?
What will be an ideal response?
Price controls distort the incentives faced by both buyers and sellers.
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A monopolistic competitor is like a monopolist in the short run in that when economic profits are
A) equal to zero, price equals marginal cost. B) equal to zero, price below marginal cost. C) greater than zero, changes in output are due to changes to plants by existing firms and there is no entry. D) greater than zero, price exceeds marginal cost.
Which of the following is true of the function of the lender of last resort?
a. Large commercial banks provide loans at low rates of interest to small banks when the small banks are unable to meet the demands of the depositors. b. The central bank reduces the discount rate to facilitate borrowing by commercial banks from the central bank. c. Commercial banks provide loans to customers with bad credit ratings who are unable to get loans from any other sources. d. The central bank reinforces the effect of deposit insurance and reassures bank customers that they will not lose their money.
Which of the following statements is most correct?
A. Money growth is the result of inflation. B. It is impossible to have high, sustained inflation without monetary accommodation. C. There is no clear link between high, sustained inflation and the monetary aggregates. D. The current rate of inflation is the result of money growth.
The entire group of buyers and sellers of a particular good or service makes up:
A. the demand curve. B. the equilibrium price and quantity. C. the supply curve. D. a market.