Suppose the equilibrium price of oranges is $2.00 per pound. If the actual price is above the equilibrium price a
A) shortage exists, and the price falls to restore equilibrium.
B) surplus exists, and the price rises to restore equilibrium.
C) shortage exists, and the price rises to restore equilibrium.
D) surplus exists, and the price falls to restore equilibrium.
E) surplus exists, but nothing happens until either the demand or the supply changes.
D
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If a nation's government has a budget deficit, then balance on goods and services:
a. Must be positive. b. Must be negative. c. Must be increasing the nation's monetary base. d. None of the above.
A Pigovian tax internalizes an external cost because
a. the cost then enters the decision-making process of the producer. b. it would be collected by the Internal Revenue Service. c. the revenue is used to compensate injured parties. d. no transactions costs are created.
The demand for money curve
A) shows the relationship between money demanded and open market operations. B) shows the relationship between the quantity of money balances demanded and the interest rate. C) is positively related to the interest rate. D) varies inversely with the supply of money.
Why does an increase in the price level cause a decrease in real GDP demanded?
a. Consumer wealth increases. b. Net exports will increase. c. Interest rates decrease and cause higher investment. d. Net exports will decrease.