Refer to Figure 2. All else equal, a major paper manufacturer filing for bankruptcy and shutting down as a result of an IRS tax evasion investigation would cause a move from
a. x to y.
b. y to x.
c. SA to SB.
d. SB to SA
Ans: d. SB to SA
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If a price floor is set above the equilibrium price in a market
A. the quantity supplied will exceed the quantity demanded. B. the quantity demanded will exceed the quantity supplied. C. rationing will be unnecessary. D. shortages will develop.
California is the sole producer of almonds in the United States. Suppose the price for a pound of almonds has increased during the past year. It is also predicted that almond prices will remain high. Over time, we predict that the
A) elasticity of supply will increase. B) elasticity of supply will decrease. C) elasticity of supply will remain constant. D) elasticity of supply will increase and then decrease.
From the classical perspective, a decrease in output during a recession is a result of
A) firms voluntarily supplying fewer goods and services in the marketplace. B) a greater quantity of goods and services supplied than is the quantity demanded for these goods and services. C) the decrease in the overall level of production due to those firms which were forced to shut down. D) the decline in availability of factors of production which naturally occurs at the onset of a recession.
According to the quantity theory of money:
a. the velocity of money is highly variable. b. the money supply directly affects real GDP. c. the money supply inversely affects velocity. d. real GDP increases as the price level increases. e. P = MV/Q.