Computers are a complement to computer software. Suppose the price of a computer falls. How does this fall in price affect the demand for computer software and the demand curve for computer software?
What will be an ideal response?
The fall in the price of a complement increases the demand for a product. Hence the fall in the price of a computer increases the demand for computer software and shifts the demand curve for computer software rightward.
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"Crowding out" is the theory that an increase in our federal government's budget deficit will likely:
a. increase the national debt. b. increase interest rates. c. decrease borrowing by households and businesses d. reduce the impact of the spending multiplier implies because of crowding out. e. all of these.
For this question, assume that the saving rate increases. We know that this increase in the saving rate will cause which of the following?
A) a temporary increase in the level of output per capita B) no permanent change in the level of output per capita C) a temporary increase in the rate of growth of output per capita D) a permanently higher rate of growth of output per capita E) none of the above
In the monetary small open-economy model with a fixed exchange rate, the domestic
A) government loses control over the level of domestic government spending. B) government loses control over the level of domestic taxes. C) government loses control over the level of domestic government spending and domestic taxes. D) central bank loses control over the domestic stock of money.
A ban on imports, a tariff, or a quota raise the price to domestic consumers. This means that consumers will buy less of the product at a higher price. The loss associated with this is called
A) production associated loss. B) barrier associated loss. C) deadweight loss. D) trade loss.