Select the letter of the diagram in Figure 28.1 that best represents the effect of each event on the United States wheat market, ceteris paribus: The dollar increases in value in the foreign exchange markets. (See Figure 29.4.)
A. a.
B. b.
C. c.
D. d.
Answer: C
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The optimal purchase rule is stated as
A. TU = MU. B. MU = P. C. TU = P. D. MU = 0.
When the Fed sells government securities in the open market, the money supply ________ because ________
A) decreases; banks lose liquidity, they make fewer loans and checking account deposits decrease B) increases; banks gain liquidity, they make more loans and checking account deposits increase C) increases; banks lose liquidity, they make more loans and checking account deposits increase D) decreases; banks gain liquidity, they make fewer loans and checking account deposits decrease E) none of the above
The equity argument for government financing of education _____
a. is dependent upon the socialization argument b. does not imply government financing c. does not imply government production d. is dependent upon externalities being inframarginal
If price-taking firms are required to install wet scrubbers on their chimneys to meet EPA regulations and their costs increase as a result, we would expect
a. demand for the product to fall b. the market supply curve to shift to the left c. the long-run economic profit of individual firms in the industry to fall d. the short-run economic profit of individual firms in the industry to remain unchanged e. short-run profits to rise as the industry raises price more than the cost of pollution