Suppose there is a permanent shift of consumer preferences away from pretzels and toward potato chips. The most likely result would be
A. short-run profits in the potato chip market increase.
B. in the short run, economic losses in the potato chip market.
C. in the long run, a fall in the supply of potato chips.
D. in the short run, a rise in the price of pretzels.
Answer: A
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When the exchange rate for a currency rises so that the currency trades for more of other currencies, it is said to be depreciating
a. True b. False Indicate whether the statement is true or false
Suppose Raul has budgeted $100 of his monthly income towards two good: t-shirts and jeans. If the price of a pair of jeans is $20 and last month he spent his $100 on a bundle containing 2 pairs of jeans and 12 t-shirts, which of the following is another point on Raul's budget line?
a. 3 pairs of jeans and 16 t-shirts b. 1 pair of jeans and 15 t-shirts c. 3 pairs of jeans and 6 t-shirts d. 0 pairs of jeans and 20 t-shirts
This curve shows there is a(n) ______ relationship between the quantity of real GDP demanded and the overall price level.
a. inverse
b. neutral
c. positive
d. indeterminate
Exhibit 17-2 Aggregate demand and aggregate supply curves
As shown in Exhibit 17-2, if people behave according to adaptive expectations theory, an increase in the aggregate demand curve from AD1 to AD2 will cause:
A. labor to adjust nominal wages immediately. B. the aggregate supply curve to shift from SRAS1 to SRAS2 C. the price level to eventually fall from 110 to 100. D. real GDP to rise from $6 trillion to $6.5 trillion permanently.