Young drivers often buy used cars. An increase in the legal driving age to twenty-one would result in a leftward movement along the demand curve for used cars, whereas lowering the age to fifteen would result in a rightward movement along the demand
curve. Indicate whether the statement is true or false
FALSE
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Increasing a fixed exchange rate is called a revaluation
Indicate whether the statement is true or false
Ceteris Paribus, if current output has fallen below potential ________
A) a positive inflation gap will ensue B) it is likely that the equilibrium real rate has fallen below the policy rate C) a negative unemployment gap will ensue D) it is likely that the equilibrium real rate has risen above the policy rate E) none of the above
A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock. B. long-run demand shock. C. long-run supply shock. D. short-run demand shock.
To test the theory that if the price of pens rises, then pen purchases fall, an economist would
A. collect data on the price of pens and the price of pencils because the two goods are substitutes. B. investigate whether people purchase more pens when their income rises. C. analyze data on pen purchases linked to the price of pens, holding other factors constant. D. ask his or her friends if they would buy fewer pens when the price rises.