Suppose the Fed increases the money supply. Which of the following is true?
A) At the original interest rate, the quantity of money demanded is equal to the quantity of money supplied.
B) At the original interest rate, the quantity of money demanded is less than the quantity of money supplied.
C) At the original interest rate, the quantity of money demanded is greater than the quantity of money supplied.
D) The interest rate must rise for the money market to clear.
Answer: B
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Normally an increase in the supply of a good will cause
A. a shift of consumer preferences in favor of that good. B. consumers to use more of that good and less of others. C. a shift of consumer preferences away from that good. D. consumers to use less of that good and more of others.
The incidence of a per-unit tax on a good is identical for buyers and sellers of the good if:
A) the buyers and sellers of the good are equally sensitive to price changes. B) the elasticity of market demand exceeds the elasticity of market supply. C) the market supply curve is flatter than the market demand curve. D) the market demand curve is horizontal.
Suppose Jack and Kate are at the town fair and are choosing which game to play. The first game has a bag with four marbles in it-1 red marble and 3 blue ones. The player draws one marble from the bag; if it is red, they win $20 and if it is blue, they win $1. The second game has a bag with 10 marbles in it-1 red, 4 blue, and 5 green. The player draws one marble from the bag; if it is red, they win $20; if it is blue, they win $5; and if it is green, they win $1. Both games cost $5 to play. Kate decides to play the second game. Kate's expected value of payoff is:
A. $5.00. B. $5.75. C. $4.50. D. $4.00.
Several producers in industry A developed an improved technology that reduces the quantity of resources used to produce a given output. Which of the following would be expected?
a. The per-unit costs of production of the firms adopting the technology would increase. b. In the short run, economic profits would be earned by the earliest firms adopting the technology. c. Product price would immediately fall to the minimum average total cost of the firms quickly adopting the technology, thus retarding the rate at which firms enter the industry. d. Producers who adopt the technology will have short-run economic losses.