When one is considering the cost of taking a trip in their car, the average cost per mile includes some items of cost that are not included in the marginal cost of a mile drive. This statement is:
a. always true
b. always false
c. sometimes true and sometimes false depending on the circumstances
d. absurd because marginal costs do not apply to mileage costs
e. none of the above
Ans: a. always true
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The above figure shows the apartment market in Big City. What could the Big City Housing Authority do if it wants to reduce the rents paid by its citizens?
A) impose a rent floor above $1350 B) impose a rent floor below $1350 C) impose a rent ceiling above $1350 D) impose a rent ceiling below $1350
Inflation: a. always reduces real income
b. never reduces real income. c. reduces the real income of workers when wages increase more than prices do. d. reduces the real income of workers when wages increase less than prices do. e. increases the real income of workers only when wages increase less than prices do.
If output exceeds its full-employment level, the wage rate will eventually fall, causing a drop in the price level and a drop in real GDP until full employment is restored
a. True b. False
Suppose the money multiplier is 5. If banks hold excess reserves, the required reserve ratio must:
A. equal 0.20. B. be less than 0.10. C. be greater than 0.20. D. be less than 0.20.