According to the quantity theory of money, in the long run an increase in the quantity of money creates an increase in the price level but does not increase real GDP.
Indicate whether the statement is true or false
Ques. 2Moral hazard exists chiefly because of
A) economies of scale.
B) diseconomies of scale.
C) private information.
D) public information.
Ques. 3At Revolution Doughnuts in Fort Collins, Colorado, a cup of coffee or a doughnut is 1. Suppose Hannah loves going to Revolution Doughnuts. She spends 5 a day at the shop on 3 doughnuts and 2 cups of coffee. Is Hannah maximizing her total utility?
A) No.
B) Maybe, but I need to know more about Hannah's income.
C) Yes.
D) Maybe, but I need to know more about Hannah's marginal utility per dollar for each of the two goods.
Ques. 4Much of the outcry in the 2008 fight over a fat bailout for Wall Street focused on the size of Wall Street's fat paychecks.
The real problem, according to corporate governance researchers, isn't the amount executives receive, it's how companies pay them. Most companies link compensation to quarterly performance, encouraging short-term gambles. One way to align pay with long-term incentives and discourage risky bets would be to stretch compensation over more years. What is a suggested solution to the principal-agent problem? A) employee ownership
B) employee incentive pay
C) employee long-term contracts
D) employee monitoring
Ques. 5Explain how price can be a regulator, that is, how it can coordinate the plans of buyers and sellers.
What will be an ideal response?
Ques. 6In the above figure of a monopolistically competitive firm, the area of economic profit is
A) ADB.
B) ABC.
C) P2AD P4.
D) P2FEP5.
Ques. 7The marginal cost (MC) curve intersects the
A) ATC, AVC, and AFC curves at their minimum points.
B) ATC and AFC curves at their minimum points.
C) AVC and AFC curves at their minimum points.
D) ATC and AVC curves at their minimum points.
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