List five factors that will cause the MP curve to shift. Explain what needs to happen to each of these factors to cause the MP curve to shift upward and to shift downward
What will be an ideal response?
1. The Fed changes the target for the nominal short-term interest rate. If the Fed increases the target, the MP curve shifts up, and if the Fed decreases the target, the MP curve shifts down.
2. Investors change the short-term interest they expect in the future. If investors increase the short-term interest they expect, the MP curve shifts up, and if investors decrease the short-term interest they expect, the MP curve shifts down.
3. Investors change the term premium they require on long-term bonds. If investors increase the term premium, the MP curve shifts up, and if investors decrease the term premium, the MP curve shifts down.
4. The default-risk premium changes. If the default-risk premium increases, the MP curve shifts up, and if the default-risk premium decreases, the MP curve shifts down.
5. The expected inflation rate changes. If the expected inflation rate decreases, the MP curve shifts up, and if the expected inflation rate increases, the MP curve shifts down.
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If the area between the line of equality and the Lorenz curve is 1,250, and the entire area beneath the line of equality is 5,000, the Gini ratio is
A) 0.25. B) 4.00. C) 0.33. D) 0.80.
The table above shows the marginal private benefit, marginal social benefit, and marginal cost of education at the College of Epsilon. What is the tuition that will make the number of students equal to the efficient number?
A) $400 B) $800 C) $2,800 D) $3,200
Net exports usually ________ when the U.S. economy is in a recession and ________ when the U.S. economy is expanding
A) increase; increase B) decrease; decrease C) decrease; increase D) increase; decrease
What is true for monopoly that is not true for perfect competition?
a. The industry demand curve is downward sloping. b. Profit is maximized where MR = MC. c. The firm and the industry are exactly the same entity. d. Positive economic profits may be earned in the short run.