Ceteris paribus, if the price of a digital camera rises, then we can expect
A. An increase in the quantity demanded of digital cameras.
B. A decrease in the quantity demanded of digital cameras.
C. A decrease in the demand for digital cameras.
D. An increase in the demand for digital cameras.
Answer: B
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If potential output equals 8,000 and short-run equilibrium output equals 8,500, there is a(n) ________ gap and the Federal Reserve must ________ real interest rates in order to close the gap.
A. recessionary; not change B. recessionary reduce C. recessionary; raise D. expansionary; raise
The ________ curves are both vertical
A) long-run aggregate supply and long-run Phillips B) aggregate demand and short-run Phillips C) short-run aggregate supply and short-run Phillips D) long-run aggregate supply and short-run Phillips
According to the Taylor rule,
a. the Fed would have the discretion to choose an appropriate inflation rate b. the Fed would announce targets for the inflation rate and real GDP c. the Fed would allow the inflation rate to increase by about 0.5 percent per year d. the Fed would allow the price level to increase by about 0.5 percent per year e. Congress would set an annual inflation rate target
If there is a recession, the Fed would most likely
a. encourage banks to provide loans by lowering the discount rate b. encourage banks to provide loans by raising the discount rate c. restrict bank lending by lowering the discount rate d. restrict bank lending by raising the discount rate e. restrict bank lending by lowering the federal funds rate