econ homework

Question 1

 

Fish teeth can function as money as long as they are seen to be a medium of exchange.

1.True

2.False

1 points   

Question 2

 

The value of money is determined by the Board of Governors of the Federal Reserve System.

1.True

2.False

1 points   

Question 3

 

Velocity is the number of times per year the average dollar is spent in relation to GDP.

1.True

2.False

1 points   

Question 4

 

The ease of converting an asset to its value in cash or spendable funds is referred to as liquidity.

1.True

2.False

1 points   

Question 5

 

National banks are chartered by the federal government and must belong to the Federal Reserve System.

1.True

2.False

1 points   

Question 6

 

 

The expression “dual banking system” refers to the fact that commercial banks can both accept deposits and make loans.

1.True

2.False

1 points   

Question 7

 

In the U.S., each state is a separate Federal Reserve district.

1.True

2.False

1 points   

Question 8

 

Commercial banks maintain reserve accounts with Federal Reserve banks to reap the benefits of the high interest rates paid on those accounts.

1.True

2.False

1 points   

Question 9

 

When a check is deposited in a financial institution and cleared through the Fed, that financial institution gains reserves.

1.True

2.False

1 points   

Question 10

 

The Depository Institutions Deregulation and Monetary Control Act of 1980 allows only commercial banks to offer interest-bearing checking accounts.

1.True

2.False

 

“””””””

Question 1

 

MV = PQ is the equation of exchange.

1.True

2.False

1 points   

Question 2

 

In the equation of exchange, an increase in M always causes an increase in Q, and a decrease in M always causes a decrease in P.

1.True

2.False

1 points   

Question 3

 

If a bank has $100 million in actual reserves and $80 million in required reserves, it may make new loans of up to $20 million.

1.True

2.False

1 points   

Question 4

 

The money supply is increased when loans are made by financial depository institutions.

1.True

2.False

1 points   

Question 5

 

With a reserve requirement of 25 percent, an injection of $100 million of new excess reserves into the economy could cause the money supply to expand by $400 million.

1.True

2.False

1 points   

Question 6

 

The interest rate charged by a depository institution for all loans is set by the Federal Reserve.

1.True

2.False

1 points   

Question 7

 

Lowering the reserve requirement is a tight money policy.

1.True

2.False

1 points   

Question 8

 

The prime rate is the rate paid by financial depository institutions to borrow reserves from the Fed.

1.True

2.False

1 points   

Question 9

 

Buying securities by the Fed would decrease excess reserves held by financial depository institutions.

1.True

2.False

1 points   

Question 10

 

The Fed has generally not followed a philosophy of increasing excess reserves to finance government deficits.

1.True

2.False

“””

Question 1

 

 

After all long-run adjustments have been completed, a firm in a competitive industry will produce that level of output where average total cost is at a minimum.

a.

True

b.

False

1 points   

Question 2

 

 

The long-run supply curve for a decreasing-cost industry is downsloping.

a.

True

b.

False

1 points   

Question 3

 

 

Marginal cost is a measure of the alternative goods which society forgoes in using resources to produce an additional unit of some specific product.

a.

True

b.

False

1 points   

Question 4

 

 

Because the equilibrium position of a purely competitive seller entails an equality of price and marginal costs, competition produces an efficient allocation of economic resources.

a.

True

b.

False

1 points   

Question 5

 

 

Refer to the above diagram. If this firm is producing at the profit-maximizing level of output in the short run, then it is achieving productive and allocative efficiency.

a.

True

b.

False

1 points   

Question 6

 

 

When entrepreneurs in competitive industries successfully innovate to lower production costs, it usually results in long-run economic profits for the firm.

a.

True

b.

False

1 points   

Question 7

 

 

The process by which new firms and new products destroy existing dominant firms and their products is called creative destruction.

a.

True

b.

False

1 points   

Question 8

 

 

Which of the following distinguishes the short run from the long run in pure competition?

a.

Firms can enter and exit the market in the long run, but not in the short run.

b.

Firms attempt to maximize profits in the long run, but not in the short run.

c.

Firms use the MR=MC rule to maximize profits in the short run, but not in the long run.

d.

The quantity of labor hired can vary in the long run, but not in the short run.

1 points   

Question 9

 

 

Which of the following conditions is true for a purely competitive firm in long-run equilibrium?

a.

P > MC = minimum ATC.

b.

P > MC > minimum ATC.

c.

P = MC = minimum ATC.

d.

P < MC < minimum ATC.

1 points   

Question 10

 

 

The process by which new firms and new products replace existing dominant firms and products is called:

a.

monopolistic competition.

b.

mergers and acquisitions.

c.

process innovation.

d.

creative destruction