The key issue in determining the relevant product market is
A. the market share test.
B. the production processes used to produce the goods.
C. the degree of interchangeability between products.
D. the specific geographic area in which competing products overlap.
Answer: C
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If the Fed raises the reserve requirement on deposits from 15 percent to 20 percent, what would happen to the money supply?
a. It would decrease. b. It would increase. c. It would remain unchanged. d. It depends on the value of interest rates.
Your friend notices that U.S. auto production and U.S. population growth have moved together over several decades. He reasons that one way to slow population growth is for the government to order the auto makers to cut back on production. You gently point out to him that he
a. is correct only when the economy is in a recession b. has mistakenly inferred causation from observed correlation c. has ignored secondary effects d. has committed the fallacy of composition e. is correct only when the United States enjoys economic growth
Suppose that an Intel worker rearranges existing machines and labor and increases the quantity of chips Intel can produce. Using the productivity curve graphed, this innovation would be described as
A) a movement upward along the curve. B) a movement downward along the curve. C) a shift of the curve upward. D) a shift of the curve downward. E) no change to the productivity curve.
Reductions in the personal income tax, often advocated by supply-siders to increase labor supply and effort, can be expected to also
a. decrease consumption spending. b. increase consumption spending. c. decrease investment spending. d. increase export sales.