If the good in the above figure is a normal good and income rises, then the new equilibrium quantity
A) is less than 300 units.
B) is 300 units.
C) is more than 300 units.
D) could be less than, equal to, or more than 300 units.
C
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Taxes create deadweight losses because they
a. reduce profits of firms. b. distort incentives. c. cause prices to rise. d. create revenue for the government.
If the Federal Reserve wanted to increase the quantity of money, it would
A) tell the banks to lower interest rates. B) purchase government securities in the open market. C) convince the federal government to run a budget deficit. D) sell government securities in the open market.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1. B. P2 and Y1. C. P2 and Y3. D. P1 and Y2.
Suppose the demand function is given by Qxd = 8Px-0.5 Py0.25 M0.12 H. Then the demand for good x is:
A. unitary. B. perfectly elastic. C. inelastic. D. elastic.