Having seen the quantity of drugs supplied by pharmaceutical companies in a competitive market, a government decides to force companies to sell exactly the same quantity of drugs at prevailing market prices
The government then forbids additional drug sales and allows doctors to prescribe the drugs at no cost to patients in need. This government scheme is A) efficient as the quantity of drugs traded is the same as under a free market.
B) efficient as the price of drugs paid by the government is the same as under a free market.
C) efficient as consumer surplus is maximized.
D) likely to be inefficient as doctors are unlikely to prescribe drugs to the consumers who are willing to pay the most for the drugs.
E) likely to be inefficient as drug producers have a captive buyer.
D
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Suppose the required reserve ratio is 10%, excess-to-deposit ratio is 10%, and the currency-to-deposit ratio is 20%. If the Fed buys $50 million worth of securities, what will happen to the money supply?
What will be an ideal response?
Suppose the following situation exists for an economy: Kt+1/N < Kt/N. Given this information, we know that
A) saving per worker equals depreciation per worker in period t. B) consumption per worker will tend to fall as the economy adjusts to this situation. C) saving per worker is greater than depreciation per worker in period t. D) the saving rate increased in period t. E) none of the above