Refer to the information provided in Figure 12.4 below to answer the question(s) that follow.
Figure 12.4There are two sectors in the economy, X and Y, and both are in long-run, zero-profit equilibrium at the intersections of S0 and D0.Refer to Figure 12.4. Assume consumer preference changes toward X and away from Y. Ceteris paribus, a new general equilibrium will eventually be reached in sector Y with a price of ________ and a quantity of ________.
A. P0; < Q1
B. P1; Q0
C. P1; Q1
D. P0; Q0
Answer: A
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Marxists and leaders of communist economies actually often admire the market mechanism for its
A. efficiency in allocation of resources. B. fairness in distribution of output. C. maximization of net benefits for consumers. D. effectiveness in achieving high rates of growth.
We say that money is a medium of exchange because it represents:
A. a certain amount of purchasing power held over time. B. something you can use to purchase goods and services. C. something you can directly offer, like any good or service, in exchange for some good or service you want. D. a standard unit of comparison.
This graph demonstrates the domestic demand and supply for a good, as well as the world price for that good.
According to the graph shown, if this economy were to open to trade, domestic producers would increase:
A. prices by $11. B. production by 75 units. C. prices by $5. D. production by 35 units.
A reason that the quantity theory of money has lost favor is that:
A. the federal funds market has been taken over by the Federal Reserve bank. B. the economy recently experienced an unexpected and deep recession. C. the quantity of money is better at predicting stock prices. D. money growth and inflation are no longer closely related.