Why does bad money drive out good money? Because
a. money has high liquidity so that an excess supply of money creates unnecessary money, which comes to dominate the money market
b. Say's Law means that money supply creates money demand and if too much money is created, it is bad because it can create inflation
c. good money is in the form of bullion (specie, such as gold) which is preferred over nonbullion money
d. people will not use bad money for exchange because it means exchanging it away so that bad money never serves the role of money
e. people will not use good money for exchange because it means exchanging it away so that good money never serves the role of money
E
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To reach an economically efficient output level, the size of an excise tax imposed on a firm generating a negative externality should be
a. the firm's marginal cost. b. the social marginal cost. c. the difference between the social marginal cost and the firm's marginal cost. d. the sum of the social marginal cost and the firm's marginal cost.
If a perfectly competitive firm is producing the short-run profit-maximizing quantity and is earning negative economic profits, the firm should anticipate ________.
A) the market equilibrium price to decrease B) the market supply to increase C) new firms to enter the market D) the market equilibrium price to increase