Keynesians believe that an increase in the money supply will lead to:
a. both c and d.
b. all of the following.
c. an increase in the price level.
d. a decrease in nominal GDP.
e. an increase in real GDP.
e
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Compared to the market demand curve, a demand curve facing a monopolistically competitive firm would be
a. more elastic. b. vertical. c. horizontal. d. the same as the market demand curve. e. less elastic.
Mark spends his weekly income on gin and cocktail olives. The price of gin has risen from $7 to $9 per bottle, the price of cocktail olives has fallen from $6 to $5 per jar, and Mark's income has stayed fixed at $46 per week. If you measure gin on the vertical axis and cocktail olives on the horizontal axis, then the budget constraint
a. is steeper after the price changes. b. is flatter after the price changes. c. is the same after the price changes. d. shifts in a parallel fashion to the old budget constraint after the price changes.
Refer to Figure 2-9. The opportunity cost of obtaining 10 additional toasters by moving from point B to point A is
a. 10 toothbrushes. b. 20 toothbrushes. c. 30 toothbrushes. d. zero, since the economy has the additional resources to produce 10 additional toasters.
Two consequences of asymmetric information are adverse selection and moral hazard. An important distinction between the two is
A) adverse selection exists prior to the completion of a transaction while moral hazard occurs after the transaction is completed. B) moral hazard exists prior to the completion of a transaction while adverse selection occurs after the transaction is completed. C) adverse selection leads to an inefficient quantity while moral hazard leads to an efficient quantity. D) moral hazard leads to an inefficient quantity while adverse selection leads to an efficient quantity.