If the United States has a lower opportunity cost than Mexico in the production of wheat, then it will import wheat from Mexico.
a. true
b. false
Ans: b. false
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One of the weaknesses in pursuing the objective of profit maximization is that it ignores
A) the timing of cash flows. B) the time-value of money concept. C) the riskiness of cash flows. D) All of the above
The Invisible Hand Principle suggests that
a. market prices direct individuals to produce more goods. b. individuals pursuing their own interests detract from the economic well-being of society. c. there should be stronger governmental initiatives to ensure cooperation for the betterment of society. d. market forces tend to channel the actions of self-interested individuals into activities that promote the general betterment of society.
Transfer payments are government grants, subsidies, or gifts to individuals or firms.
What will be an ideal response?
Bank panics:
A. occur frequently in fractional reserve banking systems. B. are a risk of fractional reserve banking but are unlikely when banks are highly regulated and lend prudently. C. cannot occur in a fractional reserve banking system. D. occur more frequently when the monetary system is backed by gold.