Answer the following statements true (T) or false (F)
1. The former Soviet Union was an example of a traditional economy.
2. The United States had a surplus balance of trade during most of the 1990s.
3. Deciding what to produce and allocating goods and services are functions of all types of economic systems.
4. Socialism combines monopoly, capitalism, private property, and a strong dictatorial central government.
1. FALSE
2. FALSE
3. TRUE
4. FALSE
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Suppose in the market for used cars, buyers would be willing to pay $9,000 for a car in good condition, while buyers would have to incur a cost of $3,500 to repair a car in poor condition. Assume a risk-averse buyer is aware that some of the cars are lemons, but is uninformed about the probability of a car being in good condition or otherwise. What price would this buyer, seeking only to minimize
risk, be willing to pay for a car? a. $3,925 b. $5,500 c. $7,775 d. $5,850
The multiple by which the commercial banking system can expand the supply of money is equal to:
A. The ratio of actual reserves to required reserves B. The reciprocal of the federal funds rate C. The reciprocal of the reserve ratio D. The ratio of required reserves to actual reserves