A war in the Middle East causes the price of oil to rise. What would we expect to happen to the demand for automobile tires?
A. The demand for automobile tires will shift left.
B. The demand for automobile tires will shift right.
C. The demand for automobile tires will stay the same.
D. One cannot tell what will happen with the information given.
Answer: A
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Figure 5-5 shows a consumer budget line for french fries and hamburgers. The price of an order of fries is $2. This implies that the price of a burger is
A. $1. B. $2. C. $4. D. $8.
Under a fixed exchange rate system, the exchange rate
a. is equal to one. b. fluctuates as the price of gold fluctuates. c. is fixed and interest rates must vary in response to balance of payment movements. d. can periodically change as economic conditions change.
The evidence shows that the domestic and world markets for American cotton contributed to the spread of slavery into new lands
Indicate whether the statement is true or false
In order to simplify the equation for the multiplier to its familiar, relatively simple form, we make use of the
a. assumption that increases in government purchases have no effect on consumer spending. b. assumption that the feedback effects associated with changes in government purchases become negligible after two or three rounds of spending have occurred. c. empirical evidence that points to a value of about 3/4 for the MPC. d. fact that the multiplier effect is represented by an infinite geometric series.