What is the motivating force behind the free market?
a) competition
b) the invisible hand
c) self-interest
d) Specialization
Ans: c) self-interest
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The Fed buys $25,000 of government securities. The desired reserve ratio is 20 percent and the currency drain ratio is zero. What will be the change in the quantity of money?
A) $5,000 B) $20,000 C) $25,000 D) $125,000 E) $50,000
In the figure above, S is the supply curve and D is the demand curve in the unregulated, competitive market for gasoline in Motorland. The external cost of gasoline is constant at $1.50 per gallon
The unregulated, competitive market for gasoline in Motorland A) produces the efficient quantity of gasoline. B) overproduces by 0.2 million gallons of gasoline a month. C) underproduces by 0.1 million gallons of gasoline a month. D) overproduces by 0.1 million gallons of gasoline a month.
Songwriters and composers press music companies to lower the price for music downloads because
a. demand for on-line music is inelastic b. profits are maximized where price elasticity of demand is -1.0 c. songwriter royalties are a percentage of sales revenue d. profits and total revenue are maximized at different quantities e. profits are maximized at the same prices as sales revenue
Discretionary policy deficits are associated with: a. increases in national saving. b. higher prices
c. lower outputs. d. lower interest rates. e. raising taxes.