Use the following table to answer the next question. The money supply and investment are in billions.Money Supply (billions of dollars)Interest RateInvestment (billions of dollars)$507%$100606110705120804130903140 Assume that the MPC is 0.8 and the reserve requirement is 0.1. If the Federal Reserve needs to increase aggregate demand by $100 billion at each price level to move the economy back to full employment and the current interest rate is 7%, then the Federal Reserve should ________ bonds on the open market equal to ________.
A. sell, $2 billion
B. sell, $4 billion
C. buy, $4 billion
D. buy, $2 billion
Answer: D
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Assume the firms in a perfectly competitive industry are initially in long-run equilibrium and the cost of labor increases. In the short run, this will cause firms in the industry to:
A) reduce output and incur a loss. B) reduce output and earn a positive economic profit. C) increase output and incur a loss. D) increase output and earn a positive economic profit.
The key characteristic of oligopoly markets is "interdependence among firms." This means that: a. the demand curve faced by each firm is perfectly elastic
b. each firm produces a product identical to its rivals. c. each firm must consider how its decisions will affect its competitors. d. firms will be able to earn above-normal profits in the long run.
Honduras is an importer of goose-down pillows. The world price of these pillows is $50 . Honduras imposes a $7 tariff on pillows. Honduras is a price-taker in the pillow market. As a result of the tariff, the price of goose-down pillows in Honduras
a. remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases. b. increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases. c. increases to a new price between $50 and $57 and the quantity of goose-down pillows purchased in Honduras decreases. d. increases to a new price above $57 and the quantity of goose-down pillows purchased in Honduras remains the same.
Stagflation is defined as _____
Fill in the blank(s) with the appropriate word(s).