As the LM curve becomes steeper, an unexpected increase in consumer confidence
A) will cause a relatively large increase in output and relatively large increase in the interest rate.
B) will cause a relatively small increase in output and relatively small increase in the interest rate.
C) is more likely to cause stock prices to rise.
D) is more likely to cause stock prices to fall.
D
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In the above figure, if the budget line shifts from RT to RS, the substitution effect is illustrated by the move from
A) a to b. B) a to c. C) b to c. D) T to S.
Suppose consumers of cigarettes can be classified into two groups: heavy users and light users. Heavy users purchase more cigarettes and are less sensitive to price changes relative to light users
To determine whether a heavy user suffers a greater loss of consumer surplus than a light user does when the price of cigarettes increases, one would need to know A) each group's average income. B) the actual quantities purchased by each. C) each individual's price elasticity of demand. D) no additional information.
An increase in aggregate supply will cause the price level to:
a. rise and GDP to rise b. rise and GDP to fall. c. rise and the unemployment rate to fall. d. fall and GDP to rise. e. fall and the unemployment rate to rise.
If a country imposes a $10 tariff on a foreign monopolist, the price received by the monopolist, net of the tariff, will:
a. fall by $10. b. fall by less than $10. c. fall by more than $10. d. fall by $0.