?
Assume that Figure 4-4 shows demand for MP3 players. An increase in the price of music downloads changes demand from
A. D1to D2.
B. D2to D1.
C. D2to D3.
D. D1to D3.
Answer: B
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Assume Joe invests a total of $10,000 in a company—$5,000 of which is his own money and $5,000 of which he borrowed at a 10 percent interest rate. If the company’s stock value decreases by 5 percent in one year at which time Joe sells his shares of the stock, what is Joe’s rate of return on his investment?
A. ?5 percent B. ?10 percent C. ?20 percent D. ?30 percent
Discretionary fiscal policy is best described as
A) a deliberate attempt to cause the economy to move to full employment and price stability more quickly than it might otherwise. B) a deliberate attempt to improve the functioning of free markets. C) an automatic change in income transfer payments to keep the economy at full employment. D) the design of a tax system that automatically stabilizes economic activity over time.
Given MU1/P1 > MU2/P2 and MU1 = MU2, how could you create a state of consumer equilibrium?
a. Make P1 equal to P2. b. Make MU1 greater than MU2. c. Make P1 less than P2. d. Make MU1 greater than P2.
A decrease in marginal tax rates will cause entrepreneurship to ________ and AS to shift to the ________.
A. decrease; right B. increase; left C. decrease; left D. increase; right