A temporary decrease in the price of oil would be considered a:
A. long-run supply shock.
B. demand shock.
C. short-run supply shock.
D. The changing price of oil would not affect any of these.
Answer: C
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Which of the following would you expect to decrease both interest rates and exchange rates? (Assume exchange rates are stated in terms of foreign currency per domestic currency.)
A) contractionary monetary policy B) contractionary fiscal policy C) expansionary monetary policy D) Both B and C will decrease both interest rates and exchange rates.
When constructing an economic model, economists
a. rely mostly on their own value judgments and ignore the far more complex world of facts b. always try to duplicate reality by including all available information c. use assumptions that are true for the individual but never true for the whole economy d. must rely on simplifying assumptions that abstract from the complexity of the real world e. are primarily concerned with making realistic assumptions
If the courts apply the rule of reason criterion to a firm that dominates a market but does not engage in anticompetitive behavior, it would not find the firm to be in violation of the antitrust laws
Indicate whether the statement is true or false
Which of the following is NOT a reason why countries trade goods with one another?
a. differences in technology used in different countries b. differences in countries' total amount of resources c. the proximity of countries to one another d. differences in countries' languages and cultures