Which of the following will occur if the price level is below the equilibrium level?
A. Consumers will bid the price level up by competing for goods
B. The quantity demanded will increase as the price level increases
C. The quantity supplied will decrease as the price level increases
D. Producers will bid the price level down by competing for buyers
A. Consumers will bid the price level up by competing for goods
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Microsoft's purchase of a factory in Mexico is entered into the U.S. balance of payments accounts as a
A) positive entry in the capital and financial account. B) positive entry in the current account. C) negative entry in the settlements account. D) negative entry in the capital and financial account. E) negative entry in the current account.
Monetary policy loses its effectiveness in all of the following situations EXCEPT
A) when the IS curve is vertical. B) when the LM curve is nearly horizontal. C) when interest rate controlled by the Fed reaches zero. D) when the IS curve is horizontal.
____ make(s) it difficult for an oligopoly to maintain a cooperative outcome with low production, high prices, and monopoly profits
a. Self-interest b. Incentives to cheat c. Government antitrust policy and regulation d. All of the above
Banca Solida has, in the past, always operated with a reserve ratio of 25 per cent. It has now been taken over by Gung-Ho Bank which operates with a reserve ratio of 12 per cent. Assuming that Banca Solida adopts the business practices of its new owner, what will be the effect on money supply in the country in which Banca Solida operates?
a. Money supply will increase because Banca Solida will increase its loans. b. The effect on money supply cannot be determined from the information given. c. Money supply will decrease because the loans will have to be repaid. d. Money supply will be unchanged because the central bank has made no policy changes.