A shift of the MP curve ________
A) implies an automatic adjustment of the interest rate
B) implies a direct policy action of the Federal Reserve
C) does not alter the relationship between inflation and the interest rate
D) all of the above
E) none of the above
B
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Answer the following statement(s) true (T) or false (F)
1. The substitution and income effects are in opposition when the price of an inferior good changes. 2. The income and substitution effect always go in opposite directions. 3. An inferior good is one that is of lower quality than a substitute. 4. When the price of a good rises, the income effect always reduces the quantity demanded of the good. 5. If the price of a non-Giffen good falls, then the income effect causes a rise in the quantity demanded.
The quantity which a firm will supply in the short run
a. can be read from its average cost curve. b. can be read from its average variable cost curve. c. can be read from the firm's marginal cost curve above average variable cost. d. is always zero above minimum average variable cost.
Compared to the level of real GDP per person in 1870, by 2010, real GDP in the U.S was ________ times larger, while real GDP per person in Japan was ________.
A. 12; smaller B. 30; 12 times larger C. 12; 12 times larger D. 12; 30 times larger
Exhibit 14A-1 Aggregate demand and supply model
Beginning from long-run equilibrium at point E1 in Exhibit 14A-1, the aggregate demand curve shifts to AD2 . The real GDP and price level (CPI) in short-run equilibrium will be:
A. $12 billion and 200. B. $8 billion and 250. C. $8 billion and 150. D. $12 billion and 250.