A temporary decrease in government purchases causes the real interest rate to ________ and output to ________ in the short run, before prices adjust to restore equilibrium
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall
D
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Each member in a group might do what's best for himself or herself instead of behaving in a way that optimizes the well-being of the entire group. This gives rise to the problem of:
A) Pareto inefficiency. B) free riding. C) irrational behavior. D) disequilibrium.
In which decade did the U.S. federal government first establish a system of agricultural price supports?
A) 1990s B) 1970s C) 1950s D) 1930s
Suppose the only two goods that Lorenzo consumes are wine and cheese. When wine sells for $10 a bottle and cheese sell for $10 a pound, he buys 6 bottles of wine and 4 pounds of cheese — spending his entire income of $100 . One day the price of wine falls to $5 a bottle, and the price of cheese increases to $20 a pound, while his income does not change. If you illustrate wine on the vertical
axis and cheese on the horizontal axis, then a. the slope of Lorenzo's budget has not changed. b. the slope of Lorenzo's budget constraint is flatter at the new prices. c. the slope of Lorenzo's budget constraint is steeper at the new prices. d. Lorenzo's budget constraint has shifted in a parallel fashion to the budget constraint with the old prices.
Microeconomics is concerned with studying which of the following?
A) the determinants of national unemployment B) the effects of monetary policy C) the study of a nation's workforce D) none of the above