The money supply may expand by less than the amount predicted by the money multiplier, if:
A. banks do not loan out all of their excess reserves.
B. banks loan out all of their excess reserves.
C. people do not deposit the money that they receive in the bank.
Answer: A. banks do not loan out all of their excess reserves.
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Economic regulation aims to control the price, output, the entry of new firms, and the quality of service in industries in which monopoly appears inevitable or even desirable
a. True b. False
The American Bar Association administers the bar examinations that prospective lawyers must pass before being allowed to practice law. The legal requirement to pass this test before practicing law allows the Bar Association to act as a
A. monopsony. B. union that can restrict the supply of lawyers. C. union that can increase the number of lawyers. D. bilateral monopoly.
Suppose two power plants pollute a river and both firms operate under a system of marketable pollution permits. If it costs Firm A $90 to reduce pollution by 800 units per day, and Firm B can reduce costs by $115 by increasing pollution by 800 units per day:
A. the firms cannot gain by trading the right to pollute. B. both firms can benefit if Firm A trades the right to increase pollution by 800 units to Firm B for $70. C. both firms can benefit if Firm B trades the right to increase pollution by 800 units to Firm A for $120. D. both firms can benefit if Firm A trades the right to increase pollution by 800 units to Firm B for $100.
An effective price floor results in a shortage.
Answer the following statement true (T) or false (F)