Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall. Holding everything else constant, how would this affect the market for wheat (a substitute for corn)?
A) The supply of wheat would increase and the equilibrium price of wheat would decrease.
B) The demand for wheat would decrease and the equilibrium price of wheat would decrease.
C) The demand for wheat would increase because consumers could afford to buy more wheat and corn.
D) The demand for wheat would decrease and the equilibrium price of wheat would increase.
Answer: B
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When the housing bubble popped, the effect of the negative demand side shock and the negative supply side shock were the same on:
A. output, causing it to definitely decrease. B. prices, causing them to definitely rise. C. output, causing it to definitely increase. D. prices, causing them to definitely fall.
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In the balance of payments, which of the following is TRUE of the sum of the capital account balance, the current account balance, and the official reserve transactions account balance?
A. This sum is positive only if the U.S. government operates with a budget deficit. B. This sum is either positive or negative, depending on whether the sum of all surplus and deficit items associated with cross-border transactions is positive or negative. C. This sum is positive only if the U.S. government operates with a budget surplus. D. This sum must always be zero, because the sum of all surplus and deficit items associated with cross-border transactions must equal zero.
If all consumers had identical preferences, then their marginal utility schedules would be the same
a. True b. False Indicate whether the statement is true or false