The equimarginal principle illustrates:
a. that consumers are essentially robots.
b. that people behave irrationally.
c. that people behave in rather consistent ways in order to maximize happiness.
d. that people behave in rather inconsistent ways.
e. that people will spend all their incomes.
c
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It is argued that the market will
A. not produce a nonexcludable public good. B. produce the socially optimal output of a nonexcludable public good. C. produce too much of a nonexcludable public good. D. produce a nonexcludable public good if marginal social benefits are equal to marginal private benefits. E. b and d
Which of the following characteristics of competitive markets is necessary for firms to be price takers? (i) There are many sellers. (ii) Firms can freely enter or exit the market. (iii) Goods offered for sale are largely the same
a. (i) and (ii) only b. (i) and (iii) only c. (ii) only d. (i), (ii), and (iii)
For a fixed target real interest rate and target inflation rate, when inflation increases, the Fed ________ interest rates, hence ________ short-run equilibrium output.
A. increases; decreasing B. decreases; increasing C. increases; increasing D. decreases; decreasing
Banks cannot influence the money supply if they hold all deposits in reserve.
Answer the following statement true (T) or false (F)