Consider the following statement, "The Federal Reserve fights recessions by increasing the money supply so people will have more money to spend." What is wrong with the statement and how can it be corrected?
What will be an ideal response?
The Federal Reserve fights recessions by increasing the money supply to lower interest rates, which in turn increases spending. It is not that people will have more money to spend, but that interest rates will be lower, which stimulates spending.
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Refer to Table 4-4. What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor (Q*)?
A) W* = $9.00; Q* = 370,000 B) W* = $9.00; Q* = 740,000 C) W* = $8.50; Q* = 380,000 D) W* = $8.50; Q* = 360,000
Firm A producing one good acquires another firm B producing another good. Price elasticity of demand for Firm A's good is -1.8 and Firm's B is -1.8 . Holding other things constant and assuming both goods are substitutes, the acquiring firm should
a. Raise prices on both goods with a larger increase in Firm A's good b. Raise prices on both goods with a larger increase in Firm B's good c. Raise prices on both goods by the same amount d. Lower prices on both goods
Suppose a consumer's utility function is U(F0, F1) = F00.5F10.5, where F0 represents food consumed this year and F1 represents food consumed next year. For that utility function, the marginal utility of food consumed this year is 0.5 × (F1/F0)0.5 and the marginal utility of food consumed next year is 0.5 × (F0/F1)0.5. Suppose the consumer earns $100 this year and nothing in the next, food costs $1 per unit in both years, and the interest rate is 10%. How much does she spend this year, and how much does she save?
A. She spends $45 this year and saves $55. B. She spends $50 this year and saves $50. C. She spends $55 this year and saves $45. D. She spends $95 this year and saves $5.
Suppose Mariana purchases the needed land fromAbe,Ben,Cat,and Don for the value she calculated the land to beworth,but Eva refuses to sell the land for the same price as the other 4 ranchers. Economists wold refer to Eva as a