This graph demonstrates the domestic demand and supply for a good, as well as the world price for that good.
According to the graph shown, if this economy were to open to trade, domestic producers would increase:
A. experience deadweight loss of FG.
B. enjoy a net gain to surplus of BC.
C. suffer a net loss to surplus of BCD.
D. suffer a transfer of surplus to producers of BC.
Answer: D
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What type(s) of individual will always choose a risk-free basket when offered a bet at fair odds?
a. A risk-neutral individual. b. A risk-averse individual. c. A risk-preferring individual. d. Risk-neutral and risk-averse individuals.
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What will be an ideal response?
If you accept the rational expectations hypothesis as accurate, what would you tell monetary policy makers who ask you how to more effectively manage the economy?
A. Only unanticipated policies will be effective once individuals understand how monetary policy works. B. Individuals base their economic expectations solely on current information, so repeating policy decisions that have worked in the past is the most effective path to take. C. Individuals do understand how monetary policy works, so consistency and predictability are the keys to effective policy making. D. Consumers do not understand the workings of monetary policy, so discretionary and nondiscretionary policies are equally effective.
Refer to the information provided in Figure 1.1 below to answer the question(s) that follow.
Figure 1.1Refer to Figure 1.1. There is ________ relationship between the daily temperature and the number of gallons of ice cream purchased.
A. both a negative and a positive B. a positive C. an inverse D. a negative