Higher real income ________ the demand for money and a higher price level ________ the demand for money.
A. increases; increases
B. decreases; decreases
C. increases; decreases
D. decreases; increases
Answer: A
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Refer to the above figure. Suppose the economy is in long-run equilibrium at point A, and the government initiates an expansionary monetary policy to increase aggregate demand
Which of the following is a TRUE statement concerning the differences between what happens when the central bank action is unanticipated and when it is anticipated? A) The new long-run equilibrium will be point C in either case. When the increase in aggregate demand is unanticipated, the economy moves to B in the short run, but when the increase in aggregate demand is anticipated, short-run aggregate supply shifts when the aggregate demand curve shifts, and the economy moves immediately to point C. B) The new long-run equilibrium when the increase in aggregate demand is unanticipated is point B while the new long-run equilibrium when the increase in aggregate demand is anticipated is point C. C) The new long-run equilibrium is point C in either case. When the increase in aggregate demand is unanticipated, the new short-run equilibrium is point B, but when the increase in aggregate demand is anticipated the new short-run equilibrium is point D. D) The new long-run equilibrium when the increase in aggregate demand is unanticipated is point B while the new long-run equilibrium when the increase in aggregate demand is anticipated is point A.
Minneapolis business Rogue Chocolatier sells specialty chocolate bars with a high cocoa content. Most chocolate companies use already processed chocolate to craft their sweets
But Rogue buys raw cocoa beans, and roasts and grinds them until they're in a liquid state and then runs the chocolate through a big squat machine with rollers. Which statement is TRUE for Rogue? A) Raw cocoa beans are a variable factor of production and the machine is a fixed factor of production. B) Both processed chocolate and raw cocoa beans are variable factors of production. C) Processed chocolate is a variable factor of production and the machine is a fixed factor of production. D) Processed chocolate and raw cocoa beans are variable factors of production and the machine is a fixed factor of production.
Abe owns a dog; the dog's barking annoys Abe's neighbor, Jenny. Suppose that the benefit of owning the dog is worth $200 to Abe and that Jenny bears a cost of $400 from the barking. Assuming Abe has the legal right to keep the dog, a possible private solution to this problem is that
a. Jenny pays Abe $150 to give the dog to his parents who live on an isolated farm. b. Abe pays Jenny $350 for her inconvenience. c. Jenny pays Abe $300 to give the dog to his parents who live on an isolated farm. d. There is no private transaction that would improve this situation.
In their 1960 article, Paul Samuelson and Robert Solow found
A) a direct relationship between inflation and investment expenditures. B) an inverse relationship between inflation and investment expenditures. C) a direct relationship between inflation and unemployment. D) an inverse relationship between inflation and unemployment.