An increase in a family’s income will cause its budget line to
A. become steeper.
B. become flatter (less steep).
C. move closer to the origin.
D. move away from the origin.
E. become more convex toward the origin.
Answer: D
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The real interest rate is equal to the
A) nominal interest rate plus the inflation rate. B) nominal interest rate minus the inflation rate. C) nominal interest rate times the inflation rate. D) nominal interest rate divided by the inflation rate. E) inflation rate minus the nominal interest rate.
Everything else held constant, if a central bank makes a sterilized sale of foreign assets, then the domestic currency will
A) appreciate. B) depreciate. C) either appreciate, depreciate, or remain constant. D) not be affected.
A demand for a product is more elastic
a. When it has few substitutes b. In the long-run c. When the expenditure on the product represent a small portion of the budget d. When the product is broadly defined
If the assets used during the various stages of production are relatively nonspecific but the markets are highly uncertain, a short-term contract is likely to be the most efficient
Indicate whether the statement is true or false