Does the money demand curve have a positive slope or a negative slope? Why does it have this slope? Explain why an increase in the variable on the vertical axis of the money demand curve causes either an increase or a decrease in the variable on
the horizontal axis of the money demand curve.
The money demand curve has a negative slope. An increase in the interest rate, the variable on the vertical axis, causes a decrease in the quantity of money demanded, the variable on the horizontal axis, because an increase in the interest rate increases the opportunity cost of holding money. Money earns little or no interest, so an increase in the interest rate induces people to reduce their holdings of money and switch into interest-bearing financial assets.
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A decrease in the expected future price of cars
A) increases the current quantity demanded of cars, that is, there is a movement downward along the demand curve for cars. B) increases the current demand for cars, that is, there is a rightward shift of the demand curve for cars. C) decreases the current quantity demanded of cars, that is, there is a movement upward along the demand curve for cars. D) decreases the current demand for cars, that is, there is a leftward shift of the demand curve for cars.
If two or more oligopolistic companies work together to keep their prices high and split the market between them, this is called
A. collusion. B. profit splitting. C. market sharing. D. perfect competition.
What is the marginal propensity to consume, and why is it always less than one?
What will be an ideal response?
You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. Assume that $35 is the most you would have been willing to pay for a ticket. Your boss called, and she is looking for someone to cover a shift on Saturday at the same time as the concert. You would have to work 4 hours and she would pay you $11/hr. The psychic cost to you of working is $2/hr. What is your opportunity cost of going to work on Saturday?
A. $0 B. $36 C. $9 D. $35