When economists say that the demand for a product has decreased, they mean that:
A. The demand curve has shifted to the right
B. The product has become particularly scarce for some reason
C. The product has become more expensive and thus consumers are buying less of it
D. Consumers are now willing and able to buy less of this product at each possible price
Answer: D
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Which of the following policy changes would lead to a decrease in the real interest rate and an increase in investment and saving?
a. a larger investment tax credit b. an expansion of eligibility for Individual Retirement Accounts c. an increase in income-tax rates, with no change in the government budget deficit or surplus d. an increase in government purchases, with no change in taxes
Economists generally agree that price controls in the U.S. would
A. diminish the motivation to invent new drugs. B. increase prices to consumers. C. diminish the motivation to invent new drugs and diminish profits to drug companies. D. diminish profits to drug companies.
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
The opportunity cost of holding money instead of an interest earning asset is the
A) inflation rate minus the real interest rate. B) inflation rate. C) real interest rate. D) nominal interest rate. E) inflation rate minus the nominal interest rate.