Redding Railroad is held liable by the courts for damages to crops growing along its lines caused by sparks flying off when trains pass. The court ordered damage assessment is $100 per adjoining acre though profits per acre are less than this. Currently, about half of the line has adjoining planted farmlands, the other half is not yet developed. As a result
a. farmers are likely to reduce the number of acres they plant.
b. farmers are likely to increase the number of acres they plant in order to collect the payment.
c. the railroad will increase the number of trains running.
d. farmers will accept payments from the railroad equal to lost profits not to plant.
b. farmers are likely to increase the number of acres they plant in order to collect the payment.
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After a temporary beneficial supply shock hits the economy, general equilibrium is restored by
A) a shift down and to the left of the IS curve. B) a shift to the left of the FE line. C) a shift up and to the left of the LM curve. D) a shift down and to the right of the LM curve.
The Ponderosa Bank receives a new deposit of $2,500. The reserves requirement is 20 percent. How much can this bank loan out as a result of this deposit?
A. $25,000 B. $12,500 C. $3,125 D. $2,000 E. $500
On November 20, 1985, the Bank of New York needed to use the lender of last resort function due to:
A. a rumor that the bank was about to be taken over by FDIC due to insolvency. B. a computer error caused the bank's records to wipe out the balances of all of its customers. C. a run on the bank started by a rumor that the president of the bank embezzled tens of millions of dollars from the bank. D. a computer error that made it impossible for the bank to keep track of its Treasury bond trades.
When AVC is rising, ATC
A. must be rising. B. must be falling. C. may be falling or rising. D. will remain constant.