What is the main problem with government guarantees that socialize losses and privatize gains?
A. They encourage overly risky investments by insulating private investors from any losses.
B. The investments that do occur never generate production of goods underproduced by the
private sector.
C. They discourage private investment in worthwhile projects.
D. They tend to benefit foreign companies at the expense of domestic firms.
Answer: A
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Which of the following best explains why monopolistically competitive firms face a downward sloping demand curve while perfectly competitive firms do not?
A) Monopolistically competitive firms sell a differentiated good. B) Monopolistically competitive industries have only a few firms. C) Monopolistically competitive firms have barriers to entry. D) Only industries with free entry and exit have firms that face horizontal demand curves.
Which of the following statements is most correct?
A. Reserves are assets of the central bank and liabilities of the commercial banks. B. Reserves are assets of the commercial banks and liabilities of the central bank. C. Reserves are assets of the central bank and liabilities of the U.S. Treasury. D. Reserves are liabilities of the commercial banks and assets of the U.S. Treasury.