How is it that economists can claim that perfectly competitive markets give people what they want?
What will be an ideal response?
Because perfectly competitive firms will produce as long as the price of their product is greater than the marginal cost of production, they will continue to produce as long as a gain for society is possible. The market thus guarantees that the right things are produced.
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You have a $500 saving bond. If the nominal interest rate is 10 percent, then the inflation rate must be
A) 10 percent if in real terms you earned $200. B) 10 percent if in real terms you earned $100. C) zero, otherwise you would sell the bond. D) 4 percent if in real terms you earned $30. E) 4 percent if in real terms you earned $70.
A decrease in the fractional reserve requirement ratio will
A) Alter the slope of the money supply curve. B) Shift the money supply curve to the left. C) Will decrease the money multiplier. D) None of the above.