What is the effect of the interaction of buyers and sellers on a market?
(A) Association of both supply and demand with income.
(B) Agreement on the price and the quantity traded.
(C) Theoretical relationship between price and use.
(D) Desire for goods that cannot actually be afforded.
Ans: (B) Agreement on the price and the quantity traded.
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Economists use ________ to forecast economic activity and to evaluate policy options
A) macroeconometric models B) educated guesses C) cost-benefit analysis D) constrained discretion
A sandwich shop owner has the following information: P = MR = $4, ATC = $2, AVC = $1, MC = 4, and Q = 500 . From this, she can determine:
a. her profits are not being maximized. b. she has earned zero economic profits. c. she has earned economic profits of $1,000. d. she has earned economic profits of $1,500. e. she should sell fewer sandwiches.
Supply-side economics is based on the theory that:
a. budget deficits will stimulate demand, output, and employment. b. budget deficits will lead to higher interest rates, which will weaken their expansionary impact. c. higher tax rates will increase tax revenues. d. increases in aggregate supply lower the price level.
If the monetary authorities want to reduce the monetary multiplier, they should:
A. increase bank reserves. B. lower the legal reserve ratio. C. lower interest rates. D. raise the legal reserve ratio.