Refer to Scenario 19.4 below to answer the question(s) that follow. SCENARIO 19.4: Suppose demand for widgets is given by the equation P = 10 - 0.25Q. Originally, the price of the good is $5 per unit. When a tax of $1 per unit is imposed, the price of the good rises to $6 per unit.Refer to Scenario 19.4. Prior to the imposition of the tax consumer surplus was ________ and after the tax was imposed consumer surplus was ________.
A. $50; $32
B. $32; $50
C. $100; $65
D. $25; $16
Answer: A
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If the currency drain ratio is zero, which of the following situations leads to the greatest total increase in the quantity of money?
A) an increase in the monetary base of $250,000 when the desired reserve ratio is 15 percent B) an increase in the monetary base of $100,000 when the desired reserve ratio is 5 percent C) an increase in the monetary base of $120,000 when the desired reserve ratio is 10 percent D) an increase in the monetary base of $100,000 when the desired reserve ratio is 50 percent E) an increase in the monetary base of $200,000 when the desired reserve ratio is 20 percent
A currency appreciation should
a. reduce net exports and therefore increase aggregate demand. b. raise net exports and therefore decrease aggregate demand. c. reduce net exports and therefore decrease aggregate demand. d. raise net exports and therefore increase aggregate demand.
Stewie spends all of his income on movie rentals (R) and noodles (N). His marginal rate of substitution for rentals with noodles is given by MRSRN = 20/?R. Suppose that movies rent for $2 and noodles cost $1. Plot his income-consumption curve, his Engle curve for movie rentals and his Engel curve for noodles.
What will be an ideal response?
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the short run would be:
A. P1 and Y2. B. P2 and Y3. C. P3 and Y1. D. P2 and Y2.