Suppose homebuyers believe that prices will fall over the next six months to a year. This would tend to
A) increase their demand for homes today.
B) decrease their demand for homes six months from today.
C) decrease their demand for homes today.
D) have no effect on their demand today or six months from today.
Ans: C) decrease their demand for homes today.
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The above figure shows Sam's budget line and one of his indifference curves. What combination of coffee and gasoline will Sam select?
A) combination a because that contains all the gasoline he needs and still has some coffee B) combination c because that contains all the coffee he needs and some gasoline C) combination b because it is on his budget line and on the highest attainable indifference curve D) none of the above
A decrease in the discount rate ________ bank reserves and ________ the money supply if banks respond appropriately to the change in the rate
A) increases; decreases B) decreases; decreases C) increases; increases D) decreases; increases
Diminishing marginal returns implies that:
A. marginal product is decreasing. B. marginal product is increasing. C. marginal product is constant. D. marginal product may be increasing or decreasing.
Assume that in a private closed economy consumption is $240 billion and investment is $50 billion, both at the $280 billion level of domestic output. Thus:
A. saving is $10 billion. B. unplanned decreases in inventories of $10 billion will occur. C. the MPC is .80. D. unplanned increases in inventories of $10 billion will occur.