Other things the same, an increase in the price level induces people to hold
a. less money, so they lend less, and the interest rate rises.
b. less money, so they lend more, and the interest rate falls.
c. more money, so they lend more, and the interest rate falls.
d. more money, so they lend less, and the interest rate rises.
d
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If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a rational firm should
A. reduce the labor used and increase the machinery used if labor costs half as much as machinery. B. reduce the labor used and increase the machinery used if labor and machinery cost the same amount. C. reduce the labor used and increase the machinery used only if labor costs more than twice as much as machinery. D. reduce the labor used and increase the machinery used only if labor costs exactly twice as much as machinery.
It is more likely at lower tax rates than higher tax rates that the:
A. quantity effect will outweigh the price effect. B. quantity effect will outweigh the income effect. C. price effect will outweigh the quantity effect. D. income effect will outweigh the price effect.
When Pierre in Paris, France buys stock in Disney, Inc., he is contributing to:
A. domestic investment in the U.S. B. capital outflow from the U.S. C. capital inflow to the U.S. D. private savings in the U.S.
In a competitive market, a negative externality creates a deadweight loss because
A) the cost of the externality is double counted. B) a harm is generated. C) price equals social marginal cost. D) price equals private marginal cost.