Restrictive monetary policy will:
A. Decrease the lending capacity for banks.
B. Reduce interest rates.
C. Cause a rightward shift of aggregate demand.
D. Raise the equilibrium price level.
A. Decrease the lending capacity for banks.
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Suppose the government reduces marginal income tax rates and increases welfare payments. This policy combination will:
A. increase the incentive to work. B. have no effect on the incentive to work. C. have an ambiguous effect on the incentive to work. D. reduce the incentive to work.
Figure 7.2
Refer to Figure 7.2. Assume that Ashley faces budget line AB with her $60 income. Then the prices of a hamburger and a book are:
A. $2 and $4 respectively. B. $3 and $4 respectively. C. $2 and $6 respectively. D. $3 and $6 respectively.
Refer to the table. If each of the 100 firms in the industry is maximizing its profit and earning only a normal profit, each must have an average total cost of:
A. $2.
B. $3.
C. $4.
D. $5.
Refer to the information provided in Figure 34.4 below to answer the question(s) that follow.
Figure 34.4Refer to Figure 34.4. The demand and supply of pounds are D2 and S1. A decrease in British demand for U.S. exports, ceteris paribus, could
A. increase the equilibrium quantity from 300 to 400 pounds. B. decrease the exchange rate ($/pound) to $1.50. C. increase the exchange rate ($/pound) to $2.00. D. increase the demand for pounds from D2 to D1.