One firm previously operated as a monopoly. Now, one potential entrant exists. Consumers would prefer
A) entry, and the firms to split the output equally.
B) no entry, and for the incumbent to produce the Stackelberg leader level of output.
C) entry, and for the incumbent to produce the Stackelberg leader level of output.
D) no entry, and the monopoly to continue.
C
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Suppose the banking system as a whole has $600 billion in deposits and $66 billion in reserves, with a reserve ratio of 11 percent. What happens to the stock of money if the Fed lowers reserve requirements by changing the reserve ratio to 10 percent?
Which of the following statements best describes financial instruments?
A. Financial instruments can transfer resources between people but not risk. B. Financial instruments can transfer risk but not resources between people. C. All financial instruments are a means of payment. D. Financial instruments can transfer resources and risk between people.