Perfect substitutes will have indifference curves that are:
a. concave
b. convex
c. straight lines
d. L-shaped
e. none of the above
Ans: c. straight lines
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With respect to Figure 7-3, the horizontal distance by which the IS curve will shift with a change in taxes is equal to
a. ?T (? b/1 – b). b. ?T(1/1 – b). c. ?T(1 – b/1 – b). d. ?T(1 + b/1 + b).
When a binding price floor is imposed on a market, a. price no longer serves as a rationing device
b. the quantity demanded at the price floor exceeds the quantity that would have been demanded without the price floor. c. all sellers benefit. d. All of the above are correct.
If the price level rises, the aggregate expenditure curve shifts downward and the economy moves up the aggregate demand curve
Indicate whether the statement is true or false
The money cost of a particular good will approximate its opportunity cost if
a. there are serious distortions in the market. b. the market functions well. c. there is much specialization in the market. d. nations are exploiting the law of comparative advantage.