Use the graph below to answer the next question.
Other things equal, an increase in the price of a complementary resource would cause a
A. move from b to a on D1.
B. shift from D2 to D3.
C. shift from D3 to D2.
D. move from a to b on D1.
Answer: C
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The most commonly used measure of changes in the cost of living for households
a. real GDP. b. the CPI. c. nominal GDP. d. the GDP deflator.
The rate of return that financial investors require to hold a risky asset minus the rate of return on a safe asset is called the:
A. nominal interest rate. B. real interest rate. C. risk premium. D. discount rate.
Two key assumptions of new Keynesian theory include:
A) (1 ) people hold rational expectations, and (2 ) wages and prices are not completely flexible in the short run. B) (1 ) people hold adaptive expectations, and (2 ) wages and prices are inflexible. C) (1 ) people hold rational expectations, and (2 ) wages and prices are flexible. D) (1 ) people hold neither adaptive nor rational expectations and (2 ) prices are inflexible. E) none of the above
Current income is 300, expected future income is 363, and the interest rate is 10%. If consumption is to be the same in each period, each period’s consumption must be
a) 330 b) 300 c) 331.5 d) 333 e) 363