In the Classical model, high unemployment ________.
A. occurred when the equilibrium GDP was too low
B. could last for a long period of time
C. would cause wages to fall
D. required government intervention to reduce it
Answer: C
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If a bank receives a new transaction deposit of $10,000 and the reserve ratio is 15 percent, then the bank could expand its loans by as much as
A) $8,500. B) $1,500. C) $66,700. D) $15,000.
A firm in perfect competition is a price taker because
A) there are no good substitutes for its good. B) many other firms produce identical products. C) it is very large. D) its demand curves are downward sloping. E) its demand curve is vertical at the profit-maximizing quantity.
Exhibit 9-4 Demand and cost curves for a monopolist
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As shown in Exhibit 9-4, in order to maximize its profit (or minimize its loss), what price should the monopoly charge for its product?
A. $60 per unit. B. $90 per unit. C. $120 per unit. D. $150 per unit.
Goods that have spillover costs affect our collective well-being and therefore can be overproduced because
A. The government is concerned about broad economic welfare. B. The government has failed to enforce contract provisions. C. Most businesses are more concerned about profits than how the environment is affected. D. The government has failed to establish rules for contracts.