What is the relationship between price and marginal revenue for firms in perfect competition? Explain
What will be an ideal response?
In perfect competition, price and marginal revenue are equal. This occurs because firms in perfectly competitive markets are price takers. Each additional unit sold results in an increase in revenue equal to the market price of the product.
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Evidence to support the Ricardo-Barro effect would show that
A) government budget deficits have no effect on the real interest rate or investment. B) higher government budget surpluses decrease investment. C) higher government budget deficits decrease investment. D) higher government budget deficits raise the real interest rate. E) government budget deficits increase household consumption.
For a given level of reserves, an increase in the reserve requirement ratio will
A) decrease legal reserves and decrease the money supply. B) increase legal reserves and decrease excess reserves. C) increase legal reserves and increase excess reserves. D) increase excess reserves and increase the money supply.