A bagel shop sells fresh baked bagels from 5 a.m. until 7 p.m. every day. The shop does not sell day-old bagels, so all unsold bagels are thrown away at 7 p.m. each day. The cost of making and selling a dozen bagels is $1.00; there are no costs associated with throwing bagels away. If the manager has 8 dozen bagels left at 6:30 p.m. on a particular day, which of the following alternatives is most
attractive?
a. Lower the price of the remaining bagels, even if the price falls below $1.00 per dozen.
b. Lower the price of the remaining bagels, but under no circumstances should the price fall below $1.00 per dozen.
c. Throw the bagels away and produce 8 fewer dozen bagels tomorrow.
d. Starting tomorrow, lower the price on all bagels so they will all be sold earlier in the day.
a
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Assume a money multiplier of 2. If the Treasury finances a $10 million expenditure by selling securities to the Fed, bank reserves will
A) remain unchanged. B) rise by $5 million. C) rise by $10 million. D) rise by $20 million.
Compared to the short run, the long-run market supply curve is
a. less elastic b. equally elastic c. more elastic d. always negatively sloped e. None of the answers is correct.
A rational-expectations theorist argues for increased government involvement in the economy to ensure stable price and employment growth.
Answer the following statement true (T) or false (F)
Assuming all else equal, any change that causes an increase in the credit supply at a given real interest rate will cause:
A) the credit supply curve to shift to the left. B) a downward movement along the credit supply curve. C) an upward movement along the credit supply curve. D) the credit supply curve to shift to the right.