A system of economic organization in which the ownership and control of productive capital assets rests with the state and resources are allocated through central planning and political decision making is called:
a. a market economy

It is usually assumed that a perfectly competitive firm's supply curve is given by its marginal cost curve. In order for this to be true, which of the following additional assumptions are necessary? I. That the firm seeks to maximize profits. II. That the marginal cost curve be positively sloped. III. That price exceeds average variable cost. IV. That price exceeds average total cost

a. All of the above. b. I and II but not III and IV. c. I and III but not II and IV. d. I, II and III, but not IV.

When the economy is at full employment and inflation is present, the government could create a surplus budget by cutting its own spending and raising taxes. The Fed would be expected to:

a. reduce the required reserve ratio, increase the discount rate, and buy securities on the open market. b. reduce the required reserve ratio, reduce the discount rate, and sell securities on the open market. c. reduce the required reserve ratio, reduce the discount rate, and buy securities on the open market. d. increase the required reserve ratio, reduce the discount rate, and sell securities on the open market. e. increase the required reserve ratio, increase the discount rate, and sell securities on the open market.