If the aggregate price level adjusts slowly over time, then an expansionary monetary policy lowers
A) only the short-term nominal interest rate.
B) only the short-term real interest rate.
C) both the short-term nominal and real interest rates.
D) the short-term nominal, the short-term real, and the long-term real interest rates.
D
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Suppose the government has declared beer to be an illegal substance and has imposed equal penalties on any person caught buying a beer and on any person caught selling a beer
Using the above figure, in which CBL is the cost of breaking the law, what is the equilibrium price and quantity with this new law in effect? A) $5 per quart and 300 quarts of beer B) $3 per quart and 500 quarts of beer C) $3 per quart and 100 quarts of beer D) $1 per quart and 300 quarts of beer
The optimal level of air quality will increase if
a. the cost of polluting increases b. pollution is found to be self-absorbing c. a new process allows pollution to be removed more cheaply d. the marginal social cost of air quality increases e. the marginal social benefit of air quality decreases
Suppose that Canada decides to peg its dollar ($C, or the loonie) to the U.S. dollar at an exchange rate of $C1 = $US1. Now suppose that the increase in the price of oil in the second half of 2007 causes the IS curve in the United States to shift to the left. If all other things remain unchanged, what will happen to U.S. interest rates?
A) They will rise. B) They will fall. C) They will not change. D) They will rise dramatically.
If the price elasticity of demand for airline tickets is 1.2 for a leisure traveler and 0.9 for a business traveler, then a price-discriminating monopolist would charge
A. a higher price for the business traveler than the leisure traveler. B. a lower price for the business traveler than the leisure traveler. C. the same price for both travelers. D. a less profitable price for the business traveler than the leisure traveler.