One of the most important forms of capital income is
A. rent.
B. profits.
C. depreciation.
D. wages.
Answer: B
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One problem with using monetary policy to address "bubbles" in asset markets is that:
A. reducing the real interest rate to deal with the bubble could lead to inflation. B. the Federal Reserve is better than financial-market professionals at identifying bubbles. C. monetary policy is not a very good tool for addressing the problem of inappropriately high asset prices. D. the Federal Reserve is not interested in stabilizing output.
Graphically, consumer surplus is the area:
a. above the demand curve. b. below the supply curve. c. under the demand curve and the supply curve. d. above the market supply curve and under the equilibrium price. e. under the market demand curve and above the equilibrium price.
The purchasing power parity theory predicts that the exchange rate between two currencies will adjust in the long run to reflect price-level differences between the two currency regions. A given basket of internationally traded goods should therefore sell for similar amounts around the world (net of transportation costs)
Indicate whether the statement is true or false
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?