For which of the following markets would the fallacy of composition most likely apply?
A. Orange market in Florida
B. Labor market
C. Gasoline market
D. Poultry market
Answer: B
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Suppose the required reserve ratio is 0.2 and the Fed buys $100,000 in government securities from Big Bank. The commercial banking system creates _____ as a result of this initial injection by the Fed
a. $1,000,000 b. $500,000 c. $100,000 d. $80,000 e. $200,000
If economic losses exist in a monopolistically competitive market,
a. new products will be introduced. b. new firms will enter the market because they see potential for profit in the future. c. firms will exit the market and the existing firms' demand curves will shift to the left. d. the average total cost curve must lie below the demand curve. e. firms will exit the market and existing firms' demand curves will shift to the right.
An increase in the target for the federal funds rate would be an example of
A. contractionary monetary policy. B. contractionary fiscal policy. C. expansionary monetary policy. D. expansionary fiscal policy.
Which of the following explanations, if true, for the observation that 80% of your company's employees choose not to opt into the company's optional retirement plan would be the LEAST consistent with standard economic theory?
A. Company-sponsored retirement plans tend to have lower-than-average returns over the long run. B. Company-sponsored retirement plans tend to have higher-than-average costs compared to other retirement saving instruments. C. When confronted with alternatives, people sometimes avoid making a choice and end up with the option that is assigned as a default. D. Across all employers, the average rate of retirement plan enrollment tends to be about 20%, which is consistent with the low demand for retirement plans.