The demand curve shifts rightward from D0 to D1 when the U.S. interest rate ________ and foreign interest rates are unchanged. The demand curve shifts rightward from D0 to D1 when the expected future exchange rate ________
A) falls; rises
B) rises; rises
C) falls; falls
D) rises; falls
E) None of the above answers is correct because the factors mentioned lead to movements along the demand curve and not to shifts of the demand curve.
B
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Suppose bicycles are produced by a competitive constant-cost industry, which is initially in a long-run equilibrium. For each of the following situations, design a supply-demand diagram that shows how market price and quantity will be affected in both the short run and the long run. In your diagrams, show the short-run supply, long-run supply, and demand curves, along with any shifts in these curves. Label the initial long-run equilibrium E0, the new short-run equilibrium E1, and the new long-run equilibrium E2.
(i) New health regulations require each bicycle firm to purchase an air purification system to reduce hazardous fumes in the workplace. Who pays for this increased cost in the short run? Who pays in the long run? (ii) The cost of titanium alloy rises, which adds $10 to the cost of manufacturing each bicycle frame. Who pays for this increased cost in the short run? Who pays in the long run? (iii) Bicycling declines in popularity as more and more people take up in-line skating. How are the profits of bicycle manufacturers affected in the short run? How are their profits affected in the long run?
If the price of peaches, a substitute for plums, increases the demand for plums will decrease
Indicate whether the statement is true or false
An example of expansionary fiscal policy is
A) an increase in government spending, or an increase in taxes, or both. B) a decrease in government spending, or a decrease in taxes, or both. C) an increase in government spending, or a decrease in taxes, or both. D) a decrease in government spending, or an increase in taxes, or both. E) holding government spending constant while increasing taxes.
The market supply of labor depends on the
a. number of employers b. marginal revenue product of labor c. price of the product being produced d. number of available workers