In the United States, government-imposed price supports are most often associated with
A. industrial products.
B. consumer electronics.
C. agricultural products.
D. high tech products.
Answer: C
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According to the interest-rate-based monetary policy transmission mechanism, an increase in the money supply generates
A) increased spending on consumer goods and services directly, which causes an increase in aggregate demand. B) an increase in aggregate supply since the supply of money is part of aggregate supply. C) lower interest rates, which causes an increase in planned real investment spending and an increase in aggregate demand. D) an increase in nominal GDP and a change in the price level, but no change in real GDP.
Canada produces MP3 players and lumber, and the horizontal axis for Canada's production possibilities frontier represents the amount of lumber produced
Canada's borders are not initially open to trade, and the country consumes along its production possibilities frontier where the MRT and MRS equal the price ratio for the two products ($200 per 1,000 board-feet of lumber versus $100 per MP3 player). If Canada opens its borders to trade with China at world prices for the two goods ($300 per 1,000 board-feet of lumber and $100 per MP3 player), what happens in the Canadian economy? A) Canada will shift consumption along the original production possibilities frontier until MRT equals the world price ratio, and Canadians will consume less lumber and more MP3 players. B) Canada will shift consumption along the original production possibilities frontier until MRT equals the world price ratio, and Canadians will consume more lumber and less MP3 players. C) Canada will be able to trade with China, and the gains from trade allow Canada to afford bundles of the two goods that do not lie along the country's production possibilities frontier. D) Canada may trade with China, but we do not have enough information to determine how the opening of the border will affect the trade decisions.
In a perfectly competitive labor market, a profit-maximizing firm will hire labor up to the point at which the
a. wage rate = MRC b. wage rate < MRP c. wage rate = MRP d. wage rate > MRP e. wage rate = MP
Monopolistically competitive firms have excess capacity. To maximize profits, firms will
a. increase their output to lower their average total cost of production and eliminate the excess capacity. b. produce where price equals marginal cost to eliminate the excess capacity. c. produce where average revenue equals marginal cost to eliminate the excess capacity. d. maintain the excess capacity.