Which of the following best describes the conditions during the Great Depression?
What will be an ideal response?
Both real GDP growth and inflation were negative.
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Refer to Figure 13-5. The candy store represented in the diagram is currently selling Qa units of candy at a price of Pa. Is this candy store maximizing its profit and if it is not, what would you recommend to the firm?
A) Yes, it is maximizing its profit by charging the highest price possible. B) No, it is not; it should lower its price to Pc and sell Qc units. C) No, it is not; it should lower its price to Pb and sell Qb units. D) No, it is not; since its marginal cost is constant, it should produce and sell as much candy as it can. It should sell Qd units at a price of Pd.
Government-backed deposit insurance ________
A) protects "good" banks from the misdeeds of "bad" banks B) is intended to encourage banks to pursue high-risk activities C) is an example of prudential regulation D) is an example of government-directed credit