When the overall price level in an economy increases, the interest rate in that economy tends to increase as well. This increase in the interest rate makes investing in domestic assets look more attractive than investing in assets in other countries, so the demand for foreign assets decreases. This is called the _____
a. interest rate effect
b. exchange rate effect
c. wealth effect
d. accelerator effect
b
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Which of the following is TRUE regarding a perfectly competitive firm?
A) The firm can charge a lower price than its competitors and thereby sell more output and increase its profits. B) The firm always earns a normal profit. C) The firm's marginal revenue continually decreases. D) The firm's minimum efficient scale is small relative to the market demand.
Assume that as the wage rate rises a worker's substitution effect for leisure is larger than the income effect. We can conclude that in this region, the worker's
A) labor supply curve will be backward bending. B) labor supply curve will have the usual upward slope. C) labor supply curve will be completely inelastic. D) supply curve will be horizontal.
Individuals who face greater risks
a. are more likely to purchase insurance b. are less likely to purchase insurance c. are neither more nor less likely to purchase insurance d. are risk neutral
Suppose that 1983 is the base year for the Consumer Price Index (CPI) and in 2015 the CPI was 226. What does this "226" mean?
A) What cost $100 in 1983 on average cost 226 times as much in 2015. B) What cost $100 in 1983 on average cost $226 more in 2015. C) What cost $100 in 1983 on average cost 100/226 (or 0.44 ) times as much in 2015 (that is, it will cost $22 in 2015). D) What cost $100 in 1983 on average cost $126 more in 2015.