Which of the following examples shows an imperfect information problem with monetary policy?
a. After the government sells bonds, many foreign banks increase their interest rates.
b. After the government increases spending, business confidence in investing increases.
c. The government implements a tax cut after the Fed decreases the money supply.
d. The government’s estimate of MPC is 20 percent too low.
d. The government’s estimate of MPC is 20 percent too low.
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The demand curve facing a firm
a. indicates the amount of raw materials and other inputs the firm will purchase, at various prices b. indicates the amount of the good demanded from that firm by a particular consumer, at various prices c. indicates the amount of output that customers will purchase from the firm, at various prices d. shows the minimum price at which the firm can sell any given quantity of output e. is horizontal in the long run, but upward sloping in the short run
A student argues: "Economic surplus is greatest at the level of output where the difference between marginal benefit and marginal cost is largest." This statement is false because
A. the marginal benefit and marginal cost relationship has no relevance to economic surplus. B. the level of output where the difference between marginal benefit and marginal cost is largest will be below the output level needed to have the maximum economic surplus. C. the level of output where the difference between marginal benefit and marginal cost is largest will also have the highest producer and consumer surplus. D. the level of output where the difference between marginal benefit and marginal cost is largest will be above the output level needed to have the maximum economic surplus.