Marginal cost is best defined as
A) the extra cost of producing one more unit of output.
B) the profit earned from selling one more unit of output.
C) the price received from selling one more unit of output.
D) equal to producer surplus.
A
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Many economists believe that savings accounts should be added to M1 because they
a. are larger in size than conventional checking accounts. b. pay larger interest than checking accounts. c. can be transferred quickly into checkable accounts. d. are also insured by the federal government.
Automatic stabilizers in the economy tend to
A. overcompensate for the irregular swings in real GDP. B. dampen the irregular swings in real GDP. C. fully offset irregular swings in real GDP. D. magnify somewhat the irregular swings in real GDP.
When the Fed uses monetary policy targets, they cannot use both a money supply target and an interest rate target at the same time because
A. It is easier for the Fed to keep track of, and influence, the interest rate B. Interest rates are determined by money supply and money demand that the Fed does not control money demand C. The Fed is only allowed to choose one target at a time to publish the Congress
Assume that the real rate of interest is 5 percent and a lender charges a nominal interest rate of 15 percent. If a borrower expects that the rate of inflation next year will be 10 percent and the actual rate of inflation next year is 12 percent:
a. neither the borrower nor the lender benefits from inflation.
b. both the borrower and the lender lose from inflation.
c. the borrower benefits from inflation, while the lender loses from inflation.
d. the lender benefits from inflation, while the borrower loses from inflation.