Quantity supplied increases when the price of a good increases because
A. producers find it more profitable to make the item.
B. potential buyers “drop out” of the market, so the good becomes more abundant.
C. as demand decreases with a high price, surpluses appear.
D. All of these responses are correct.
Answer: A
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Why is the demand for loanable funds downward sloping?
A) People save less when the interest rate is low. B) More people borrow money when interest rates are low than when they are high. C) Fewer investment projects have returns that can beat higher interest rates, so people are more willing to invest at higher interest rates. D) People save more when the interest rate is high.
By the time Paul Volcker took office as the new Federal Reserve chairman in 1979, both the inflation and unemployment rates were higher than during most of the 1950s, 60s and early 70s
The Federal Reserve implemented an autonomous tightening of monetary policy that resulted in the famous Volker Disinflation which was successful in bringing both problems under control. What would have been a likely result had Mr. Volker conducted an expansionary monetary policy instead? A) Inflation would have been made worse right away but unemployment would have been permanently lowered. B) In the long run the unemployment problem would not have been fixed and the inflation problem would have been made much worse. C) In the short-run both inflation and unemployment would have declined but in the long-run unemployment would have been worse than before the Fed's action. D) In the short-run both inflation and unemployment would have been made worse but both would have been lowered in the long-run. E) none of the above
With a monopsony in the labor market, a union can often raise wages and the number of workers hired
a. True b. False Indicate whether the statement is true or false
The fact that invention is based largely on fixed costs and is a public good means that which of the following is not relevant to the process?
A. Average total cost B. Marginal cost C. External cost D. Average variable cost