Use the figure below to answer the following question. The equilibrium point in the market is the point at which the S and D curves intersect.
Assuming equilibrium price P1, consumer surplus is represented by areas
A. a + c.
B. a + b + c + d.
C. c + d.
D. a + b.
Answer: D
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If the economy were producing at point Z and moved to point D,
A. it could only produce more butter at the sacrifice of some gun production.
B. it could only produce more guns at the sacrifice of some butter production.
C. it could produce more guns and more butter at the same time.
D. it would be impossible to produce more guns without the sacrifice of some butter production.
A decrease in the price level accompanied by no change in the money wage rate leads to ________ movement along the ________ aggregate supply curve
A) a downward; short-run B) an upward; short-run C) a downward; long-run D) an upward; long-run
Other things constant, if the Fed decreased the discount rate,
a. the earnings of the Fed would increase. b. the incentive of commercial banks to borrow from the Fed would be reduced. c. the prime interest rate would automatically decline. d. commercial banks probably would reduce their excess reserves and be more willing to extend additional loans.
Certifying a used car through a brand dealership is one way to:
A. credibly screen out lemons. B. unreliably signal that the car is not a lemon. C. unreliably screen out lemons. D. credibly signal the car is not a lemon.