Referring to Figure 2.1,if you increase the production of farm goods, what other area is affected?
A) how much people can purchase B) the production of manufactured goods
C) the wages earned by farm workers D) the price of produce
B
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Use consumer indifference curves and budget lines to show the optimal consumption curves for a normal good and for an inferior good. (Use two graphs.) Be sure your graphs are completely and correctly labeled.
What will be an ideal response?
In calculating GDP, we must
A) add the market value of imports and subtract the market value of exports. B) add the market value of exports and subtract the market value of imports. C) exclude net exports of goods and services (NX). D) add the value of the goods produced outside of the United States by American firms. E) subtract the market value of imports, because these goods are produced in a country other than the United States, and subtract the market value of exports, because these goods are consumed in a country other than the United States.
Which of the following will cause the demand for loanable funds to increase?
A. Households increase their rate of savings. B. The expected rate of return increases. C. The cost of funds increases. D. The expected profitability of a project declines.
In a simplified banking system subject to a 25 percent required reserve ratio, a $1,000 open-market purchase by the Fed would cause the money supply to:
A. increase by $1,000. B. decrease by $1,000. C. decrease by $4,000. D. increase by $4,000.