The figures below illustrate a situation of a trade embargo. In Figure (a) Dd and Sd are the domestic demand and supply curves of the embargoing countries. Prior to the embargo there was free trade at the world price of P0.
As a result of this embargo, the world as a whole loses Area
A. (a + b + c + d).
B. (a + c).
C. a.
D. (b + c).
Answer: B
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If an increase in the interest rate raises savings, then
a. the substitution effect is greater than the income effect. b. the income effect is greater than the substitution effect. c. the income effect and the substitution effect move in the same direction. d. we are unable to determine the sizes of the income and substitution effects without more information.
A manager in charge of new product development can hire engineers and market researchers. The annual salary of an engineer is $30,000 and that of a market researcher is $20,000. The marginal contribution of engineers and market researchers are
Given the above information, if the manager currently has two engineers and one market researcher, what must be true?
A. Fewer new products will be developed if he hires fewer engineers and more market researchers. B. He is not making the correct decision because MPE / PE > MPR/ PR. C. More new products will be developed if he hires fewer engineers and more market researchers. D. He is making the correct decision because MPE = MPR.
Which of the following contributes to implementation lag for discretionary fiscal policy?
A) the time it takes to secure legislative approval for policy actions B) the time it takes for economic agents to respond to policy actions C) the difficulty of collecting economic data in a timely manner D) the time it takes to borrow funds to finance the fiscal policy
A change in any of the ceteris paribus conditions for demand leads to a
A. change in supply. B. a good going from an inferior good to a normal good. C. shift of the demand curve. D. movement along the demand curve.