Refer to the above table. Assume the consumer spends his entire income. The price of a hotdog is $1, the price of a movie is $6, and the consumer has $15. What is the consumer's optimum?
A. 0 hotdogs and 2.5 movies
B. 3 hotdogs and 2 movies
C. 4 hotdogs and 4 movies
D. 2 hotdogs and 2 movies
Answer: B
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A government subsidy paid to a firm i. increases the demand for the good. ii. has no effect on the supply of the good. iii. leads to an increase in the equilibrium quantity
A) i only B) i and ii C) ii only D) iii only E) i and iii
Why are there significant time lags in monetary policy?
a. Financial markets are inefficient and information takes several months to impact them. b. Changes in monetary policy only affect future projects such as factories, not current ones. c. Interest rates takes several months to change after a change in money supply. d. Interest rates are fixed and it takes several months to change laws to have the targets amended. e. Because of the Fed's relative inability to convince Congress about the necessity of a particular monetary policy.
The decision by firms to enter a market shifts the market supply curve to the right.
Answer the following statement true (T) or false (F)
The traditional Phillips curve suggests a conflict or tradeoff between
A. price level stability and income equality. B. the level of unemployment and price level stability. C. unemployment and income equality. D. economic growth and full employment.