Which of the following is an example of an application of the ceteris paribus assumption?
A) An analysis of how price changes affect how much of a good people will purchase when all other factors are held constant
B) An analysis of how people purchase more goods when prices decline and income increases
C) After reading an article on the dangers of high-fat diets, an individual buys less red meat when prices increase
D) An analysis of how worker productivity increases when a firm invests in new machines and training programs
A
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In the simple deposit expansion model, if the Fed extends a $100 discount loan to a bank that previously had no excess reserves, the bank can now increase its loans by
A) $10. B) $100. C) $100 times the reciprocal of the required reserve ratio. D) $100 times the required reserve ratio.
A decrease in money supply 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
Managers and entrepreneurs are
A) the same. B) different. C) assume risk. D) always stockholders.
If the economy produces its potential output level, then unemployment is at the natural rate and the actual price level is equal to what producers and others expected. Consequently there is no tendency for price or output to change
Indicate whether the statement is true or false