Assume the demand for money curve is stationary and the Fed increases the money supply. The result is that people:
a. increase the supply of bonds, thus driving up the interest rate.
b. increase the supply of bonds, thus driving down the interest rate.
c. increase the demand for bonds, thus driving up the interest rate.
d. increase the demand for bonds, thus driving down the interest rate.
d
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To deter a potential entrant, an existing firm in a market may threaten to sharply increase production so that the entrant will be left with a small share of the market. This may be a credible threat if:
A) production exhibits economies of scale. B) production exhibits diseconomies of scale. C) production costs may fall due to learning-by-doing. D) A and C are correct. E) B and C are correct.
The fact that interest groups exist on both sides of an issue mean that _____
a. no special interest group gets everything it wants b. rational ignorance is nonexistent c. a prisoner's dilemma exists d. politicians are exposed to all viewpoints on an issue