This graph demonstrates the domestic demand and supply for a good, as well as the world price for that good.
According to the graph shown, if this economy were to open to trade, domestic producers would:
A. transfer surplus in area BCD to foreign producers.
B. transfer surplus in area BC to consumers.
C. receive additional surplus of BCD.
D. lose surplus in area BCD to foreign consumers.
Answer: C
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If the Federal Reserve lowers its target inflation rate, the monetary policy reaction function ________ and the aggregate demand curve ________.
A. shifts downward to the right; shifts to the left B. shifts downward to the right; shifts to the right C. shifts upward to the left; shifts to the left D. shifts upward to the left; shifts to the right
A change in consumer taste will prompt a change in _____.
Fill in the blank(s) with the appropriate word(s).
When the Fed buys government bonds,
a. the money supply increases and the federal funds rate increases. b. the money supply increases and the federal funds rate decreases. c. the money supply decreases and the federal funds rate increases. d. the money supply decreases and the federal funds rate decreases.
At high levels of interest, borrowers will borrow ____ and suppliers will supply ____.
A. more; less B. less; more C. less; less D. more; more