Which of the following compose the reserves of a commercial bank?
A. checkable deposits and time deposits
B. vault cash and deposits of the bank with the Federal Reserve
C. U.S. securities and stock equity
D. cash and U.S. securities
Answer: B
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Marginal cost
A. equals both average variable cost and average total cost at their respective minimums. B. is the difference between total cost and total variable cost. C. declines continuously as output increases. D. rises for a time but then begins to decline when diminishing marginal returns set in.
A decrease in the unemployment rate from 21 percent to 17 percent can be illustrated as: a. an inward shift of the production possibilities curve
b. an outward shift of the production possibilities curve. c. a movement down and to the right along the production possibilities curve. d. a movement from a point inside the production possibilities curve to a point closer to the production possibilities curve.
One way insurance firms reduce moral hazard costs is by doing which of the following?
a. charging the buyer lower payments regardless of whether the buyer engages in risky behavior b. making buyers prove they will not engage in risky behavior before they may buy insurance c. charging the buyer higher payments regardless of whether the buyer engages in risky behavior d. making the buyer pays some of the costs in the form of deductibles and co-pays
Which of the following statements is correct?
a. A decrease in the size of a tax always decreases the tax revenue raised by that tax. b. A decrease in the size of a tax always decreases the deadweight loss of that tax. c. Tax revenue decreases when there is a small decrease in the tax rate and the economy is on the downward-sloping part of the Laffer curve. d. An increase in the size of a tax leads to an increase in the deadweight loss of the tax only if the economy is on the upward-sloping part of the Laffer curve.