Assume the central bank decides to pursue contractionary monetary policy. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real credit market with supply of real credit shifting to the right.
b. Start the analysis in the real credit market with aggregate demand for real credit shifting to the left.
c. Start the analysis in the real credit market with demand for real credit shifting to the left.
d. Start the analysis in the real credit market with demand for real credit shifting to the right.
e. Start the analysis in the real credit market with supply of real credit shifting to the left.
.E
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The planned investment function shows that
A) real gross investment falls as real NNP increases. B) a negative relationship exists between the level of planned investment and the interest rate. C) a positive relationship exists between planned consumption and planned investment. D) at higher levels of planned saving, planned investment increases.
Velcro is becoming more and more popular for a variety of uses, including as fasteners for shoes. What should happen to the equilibrium price and quantity for shoelaces as a result?
a. Both price and quantity should increase. b. Both price and quantity should decrease. c. Price should increase and quantity decrease. d. Price should decrease and quantity increase. e. Nothing.
Governments in market economies usually have significant control over
A. investment spending. B. personal consumption spending. C. import spending. D. education spending.
The following table shows four firms, the amount each pollutes, the marginal cost for each firm to clean up pollution, and the total cost to each firm of eliminating all pollution.FirmTotal Discharge (in tons)Marginal Cost of Cleanup(per ton)Total Cost of CleanupA60$5.00$300B70$8.00$560C80$7.50$600D90$4.00$360The total discharge of these four companies is 300 tons. Assume there is no one else who pollutes. Suppose that the government gives each company a pollution permit equal to 50 percent of its present discharge. However, companies are allowed to reduce pollution more than 50 percent and sell their permit or reduce less than 50 percent and buy a permit from another company. If firms maximize profits, what would happen?
A. Each firm would reduce pollution by 50 percent. B. Firms A and D would eliminate pollution and sell their permits with a reasonable price to B and C, which would continue to pollute as before. C. Firms B and C would eliminate pollution and sell their permits with a reasonable price to A and D, which would continue to pollute as before. D. There is not enough information to answer this question.