The WWQX Co sells shirts. Shirts with the company label on the tag are perceived to be of higher quality than shirts with the store's label. Yet, shirts are of identical quality regardless of the label. The demand for perceived high-quality shirts is ph = 80 - qh. The demand for perceived low-quality shirts is pl = 19 + ph - ql. The firm can produce shirts at TC = 2qh + 2ql. How many shirts does
the firm label as low quality and how many as high quality? What prices are charged?
A) ql = 29; qh = 39
B) ql = 39; qh = 79
C) ql = 19; qh = 25
D) ql = 20; qh = 18
A
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The amount the government budget deficit would be if the economy were at full employment is known as the
A) primary deficit. B) full-employment deficit. C) natural deficit. D) current deficit.
Assume a one year U.S. bond pays 4.0% interest and a similar U.K. bond pays 5.2% interest. Which of the following changes will establish interest rate parity?
a. The British pound would be expected to appreciate by 1.2% against the U.S. dollar. b. The U.S. dollar would be expected to depreciate by 1.2% against the British pound. c. The British pound would be expected to depreciate by 1.2% against the U.S. dollar. d. The British pound would be expected to appreciate by 9.2% against the U.S. dollar. e. The U.S. dollar would be expected to appreciate by 9.2% against the British pound.
If the government increases taxes, which of the following will occur in the short run?
a. An increase in GDP, an increase in the price level, an increase in money demand and an increase in the interest rate. b. An increase in GDP, an increase in the price level, a decrease in money demand and an increase in the interest rate. c. An increase in GDP, a decrease in the price level, an increase in money demand and an increase in the interest rate. d. A decrease in GDP, a decrease in the price level, a decrease in money demand and a decrease in the interest rate. e. A decrease in GDP, an increase in the price level, an increase in money demand and a decrease in the interest rate.
Medicaid and food stamps are
a. available only to the elderly. b. forms of in-kind assistance. c. forms of cash assistance. d. transfer payments.