Suppose demand for a good is QD = 100 - P and supply is QS = -20 + P. Suppose that a nationwide quota (of 20) is enforced so that more can be used in a war effort. What is the price?
a. 20
b. 40
c. 60
d. 80
d
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The term market always refers to
a. an arrangement in which an auctioneer plays at least a limited role in setting prices. b. an arrangement in which buyers and sellers meet at a specific time and place. c. a group of buyers and sellers of a particular good or service. d. a single buyer and seller of a particular good or service.
Answer the following statements true (T) or false (F)
1. An increase in the money supply always causes an increase in the price level. 2. The effect of a change in the money supply on economic activity may be offset by a change in velocity. 3. An increase in the velocity of money can have an effect similar to that of an increase in the money supply. 4. A government surplus may trigger a decline in the money supply. 5. If the CPI reads 150, prices have increased 50 percent since the base year.
Regulatory policies requiring lenders to extend more low down-payment loans to higher-risk borrowers along with the Fed's low short-term interest rate policy during 2002-2004 caused
a. housing prices to fall during that period. b. a reduction in the use of adjustable rate mortgages to finance the purchase of housing. c. a reduction in housing construction during 2002-2005. d. mal-investment, that is, excessive investment in housing construction during 2002-2005.
In the classical model, the interest rate will adjust to equate
A. saving with investment. B. the economic growth rate with the growth rate of import spending. C. export spending with import spending. D. consumption spending with real GDP.