Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market, ceteris paribus: Transport costs for farm products increase. (See Figure 29.4.)
A. a.
B. b.
C. c.
D. d.
Answer: A
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Within the circular flow model, which of the following is not represented as a flow of funds into firms?
A) Foreign purchases of goods and services. B) Income payments. C) Consumption spending. D) Government purchases.
The problem of moral hazard that resulted from federal deposit insurance can be attributed to all of the following except
A) depositors have little incentive to monitor their bank. B) deposit premiums until recently did not depend on risk. C) risk aversion by managers of banks plus bank examination. D) the incentive of bank stockholders to increase risk because they share disproportionately in success but the FDIC shares disproportionately in failure.
By approximately how much would the federal government have to raise each worker's annual taxes to eliminate the current federal budget deficit?
A) between $50 and $100 per year B) about $50,000 per year C) between $50,000 and $100,000 per year D) about $4,000 per year
Most economic forecasts
a. are accurate b. are more reliable than weather forecasts c. rely on mathematical models d. are totally unreliable because economic changes upset outcomes e. are based on ceteris paribus assumptions