Judy Carl has been eyeing for weeks a Prada handbag (made in Milan, Italy) in the store window at Neiman-Marcus. She is willing to pay $250 for it (a birthday gift for herself, she rationalizes) if the price ever came down to that. Well, she is in luck! It goes on sale for $200, down from $325 . She rushes in to make the purchase. She not only gets the handbag, but also a consumer surplus of
a. $125
b. $50
c. $200
d. $75
e. $375
B
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The observation that the money supply is procyclical and leading the level of aggregate economic theory is most closely associated with
A) Lucas and Friedman. B) Friedman and Schwartz. C) Kydland and Prescott. D) David Runkle.
In the classical model, an increase in government spending shifts the
a. demand for loanable funds to the right. b. demand for loanable funds to the left. c. supply of loanable funds to the right. d. supply of loanable funds to the left.
Which of the following does not lessen intergovernmental competition?
a. direct intergovernmental grants b. direct regulations c. the decline in school districts d. decline in local tax receipts
If the actual price level is lower than the expected price level reflected in long-term contracts,
a. the actual rate of unemployment will be less than the natural rate of unemployment. b. the actual rate of unemployment will exceed the natural rate of unemployment. c. the natural rate of unemployment will rise. d. the natural rate of unemployment will fall.