In a free-market system, producers will react to an increase in demand when
a. the price goes up.
b. the government announces the increased demand.
c. their costs increase.
d. the free press publishes news of the increased demand.
a
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What will be an ideal response?
Under a fixed exchange rate system, if the inflation rate in the United States is 0 percent a year and the inflation rate in Australia is 5 percent a year, then the U.S. real exchange rate will
A) may increase or decrease. B) decrease 5 percent a year. C) remain constant. D) increase 5 percent a year.
The nation of Futura has an actual capital-labor ratio which is in steady state. Futura will experience
A) no growth from convergence and the economy will remain on its balanced growth path. B) positive growth from convergence to keep the economy on its balanced growth path. C) positive growth from convergence, but the growth will be less than the balanced growth rate in order to remain on its balanced growth path. D) negative growth from convergence to offset the increase in the balanced growth rate in order to remain on its balanced growth path.
A kinked demand curve is based on the actions of an oligopolist to follow a price increase but not a price reduction
a. True b. False Indicate whether the statement is true or false