Higher home values can increase output in the economy if:
A. people sell their existing home and build a new one.
B. people finance their child's college education by securing a second mortgage on their now higher-valued home.
C. people take some of the equity out of their homes and spend it on a vacation.
D. all of the answers given are correct.
Answer: D
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The quantity theory of money:
A) assumes that the ratio of money supply to nominal GDP decreases over time. B) assumes that the ratio of money supply to nominal GDP increases over time. C) is a representation of how a change in money supply affects the price level in an economy. D) is an exact representation of how the economy behaves in the long-run.
In the figure above, suppose the price of a pound of pecans is negatively related to the quantity of peanuts that farmers are willing to supply. If the price of pecans increases,
A) the curve will shift rightward. B) the curve will shift leftward. C) there is a movement along the curve. D) the curve will be unaffected. E) None of the above answers is correct because the graph assumes that the price of pecans does not change.
Perfectly competitive markets:
A. tend to have relatively few sellers. B. are more of an idealized model economists use than a real-life occurrence. C. tend to have relatively few buyers. D. are the most common type of market in the United States.
In economics, the term capital refers only to some form of money.
Answer the following statement true (T) or false (F)