Stock prices tend to ________ when the Federal Reserve raises interest rates because higher interest rates ________ dividends.
A. rise; reduce
B. rise; increase
C. fall; increase
D. fall; reduce
Answer: D
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In the Classical view, inflation is the result of
A) excessive monetary growth. B) speculation. C) government spending. D) natural disasters.
Milky Moo and Mega Cow are the only sellers of milk. Milky Moo's supply function is QsMMoo = 12P - 6 at prices above $0.50 and zero at prices below $0.50. Mega Cow's supply function is QsMCow = 9P - 3 at prices above $0.33 and zero at prices below $0.33. In this case, the market supply curve for milk is:
A. kinked at a price of $0.33. B. kinked at 1.5 units. C. downward sloping. D. kinked at 3 units.
Hugo consumes a certain combination of pizzas and cola. However, he can afford more of cola, given his budget constraint. Graphically, this would imply that his choice lies: a. on the budget constraint
b. within the budget constraint. c. outside the budget constraint. d. on one of the axes.
Explain why the equilibrium price is called the market clearing price
What will be an ideal response?