The public debt is the
A. accumulation of all past deficits minus all past surpluses.
B. amount of U.S. paper currency in circulation.
C. ratio of all past deficits to all past surpluses.
D. difference between current government expenditures and current tax revenues.
Answer: A
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Two firms, Alpha and Beta, produce identical computer hard drives. They have identical costs, and the hard drives they produce are identical. The industry is a natural duopoly
Alpha and Beta enter into a collusive agreement, according to which they split the market equally. If both firms comply with the agreement A) together they will operate in a way indistinguishable from a monopoly. B) the price of a hard drive will be equal to marginal cost. C) each firm will make zero economic profit. D) the oligopoly will produce more hard drives than a profit-maximizing monopoly would produce.
According to the rational expectations school, if the Fed announces a policy of rapid growth in the money supply, but then puts the brakes on money expansion without any announcement, which of the following is likely to be the short-run result?
a. An unexpected surge in aggregate demand b. An unexpected drop in aggregate demand. c. An anticipated surge in aggregate demand. d. An anticipated drop in aggregate demand. e. No change in aggregate demand.