The following graph is the production possibilities curve of a nation:
Refer to the above graph. The combination "5 drill presses and 2 bread" indicates:
A. An unattainable combination for the nation
B. Some resources in the nation are unemployed
C. An ideal combination for the nation
D. A combination produced when the nation is at full employment
Answer: B
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Suppose Bank A holds $50,000 in deposits with other banks. In the balance sheet, this amount will be accounted as Bank A's:
A) cash equivalents. B) short-term borrowing. C) long-term investments. D) reserves.
Consider a perfectly competitive market experiencing good times. In the short run, the equilibrium price will ________ and firms will earn a(n) ________
A) increase; economic profit as the new price exceeds average total cost B) increase; normal profit as the new price exceeds average total cost C) decrease; economic loss as new firms enter the industry D) decrease; economic profit as firms exit the industry E) may increase or decrease; normal profit depending on their costs
One possible solution to improve performance of regulated firms is which of the following?
a. Allow the firm to set its own rate of return. b. Allow higher rates of return to cover higher cost of better performance. c. Allow a higher rate of return for better performance. d. Set lower prices when efficiency improves.
According to the textbook, the best possible solution to the problem of poverty is:
A. the complete elimination of all efforts to assist the poor. B. a negative income tax with the tax credit equal to the poverty threshold. C. to maintain the current system. D. a combination of a negative income tax and public employment.