The price chosen by a monopolist:
A) maximizes social surplus.
B) maximizes consumer surplus.
C) is dependent on the production of other firms.
D) is independent of the production of other firms.
D
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When the Fed increases the federal funds rate,
A) there is no effect on investment because investment depends on the real interest rate. B) the real interest rate falls, and investment increases. C) the real interest rate rises, and investment decreases. D) the real interest rate is unaffected, but investment still decreases. E) the real interest rate rises, and investment does not change.
Which of the following is most representative of the functional finance view of the macroeconomy?
A. Budgets should be balanced. Doing otherwise is morally wrong. B. The government should decide on tax and spending plans based on their effects on the economy. C. The economy is self-regulating and the best thing the government can do to enhance stability is to stay out of the way. D. Crowding out almost completely cancels out any deficit spending, so fiscal policy is likely to be ineffective.