If OPEC is an effective cartel,
a. price changes are dictated by changes in demand.
b. output changes are dictated by changes in demand.
c. members agree on output quotas.
d. all of these.
c
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Most economists agree that modest inflation is desirable over zero inflation because:
A. it helps firms to more easily adjust real wages. B. it allows a margin of error for those deciding on the money supply. C. it allows the Fed to more easily engage in expansionary monetary policy. D. All of these statements are true.
Give an example that is not in the text of a good that has a change of demand, but not a change of supply. What effect does this change have on the good’s equilibrium price and quantity?
What will be an ideal response?
The figure above shows the market for fast food restaurant employees in a college town in a small nation to the East. The local Taco Bell pays its workers $12 an hour. This wage rate is
A) designed reduce the unemployment rate. B) an effort to increase the demand for labor. C) illegal because the equilibrium wage rate is $6 an hour. D) an efficiency wage aimed at reducing employee turnover. E) the actual equilibrium wage rate.
Suppose pizzas are the only good and people have homothetic preferences. The supply of pizzas today is perfectly inelastic and determined solely by people's endowments. Which of the following would cause the interest rate to rise?
a. A 50% increase in pizza production, this year and throughout the future. b. A 50% increase in this year's pizza production that is not expected to affect future harvests. c. An expected 50% increase in future pizza production. d. A hurricane that permanently destroys 50% of all pizza parlors.