The accompanying supply-demand diagram shows the market for calculators. The initial price of calculators is P0, and the initial quantity exchanged is Q0.
Which of the following situations could be correctly illustrated by the diagram?
a. Graphing capabilities and other new features lead people to buy more calculators.
b. The cost of memory chips used in calculators falls, lowering the price of calculators.
c. Personal computerized notepads with substantial computing power are introduced, reducing people's need for calculators.
d. A heavy tariff is placed on calculators imported from overseas.
b. The cost of memory chips used in calculators falls, lowering the price of calculators.
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The tax burden in the United States, measured as a percentage of GDP, represents a much larger share spend compared to most other industrialized nations.
Answer the following statement true (T) or false (F)
If a person's nominal income increases by 5% while the price level increases by 2%, then that person's real income
A. increases by 3%. B. decreases by 2%. C. decreases by 7%. D. increases by 5%.
Under a flexible exchange rate system, exchange rates are determined by free markets
Indicate whether the statement is true or false
If financial intermediaries charge a higher rate of interest to lenders than they pay to borrowers, then
a. investing with borrowed funds involves a higher opportunity cost than investing with savings b. investing with saving involves a higher opportunity cost than investing with borrowed funds c. a firm is charged less interest to borrow than it can earn on savings d. the opportunity cost of investing with borrowed funds equals the opportunity cost of investing with savings e. a firm does not consider the market rate of interest when it makes investment decisions