When the supply of credit is fixed, an increase in the price level stimulates the demand for credit, which in turn reduces consumption and investment spending. This argument is called the:
A. real balances effect.
B. interest-rate effect.
C. net exports effect.
D. substitution effect.
Answer: B
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If a nation is more productive than a trading partner, can it still gain from trade with that partner? Use the concepts of absolute and comparative advantage to explain
What will be an ideal response?
When demand for a firm's product decreases, the firm can take a number of steps to adjust costs and quantities supplied to the market. Some are listed below. Which actions are short run and which are long run? Explain your reasoning
a. Layoff 25 percent of the firm's existing employees. b. Declare bankruptcy and sell all of the firm's plant and equipment. c. Require management personnel to take a significant cut in pay. d. Furlough employees for 3 days each month. e. Move to a smaller production facility.
The value of human capital is determined by
A. the forces of supply and demand for human capital in the market. B. an investment board at the New York Stock Exchange. C. a ranking system of the relative value of different types of education to society. D. a special team of experts in each college and university.
In the diagram, the economy's immediate-short-run AS curve is line ______, its short-run AS curve is _____, and its long-run AS curve is line ______.
A. 1; 2; 4
B. 1; 2; 3
C. 2; 3; 4
D. 3; 2; 1