Assume that the stock of money is determined by the Federal Reserve and does not change when the interest rate changes. This situation means that the
A. supply of money curve is vertical.
B. supply of money curve is horizontal.
C. supply of money curve is inversely related to the interest rate.
D. demand for money curve is directly related to the interest rate.
Answer: A
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If the rate of interest did not equate saving and investment and total output was greater than total spending, the classical economist argued, competition would tend to force
A. product and resource prices down. B. product prices up and resource prices down. C. product prices up and resource prices up. D. product prices down and resource prices up.
There is a government budget surplus if
A) T - TR > G. B) G > T. C) G > TR. D) TR < T.
Collusion occurs when
A) a firm chooses a level of output to maximize its own profit. B) two firms' price and output decisions come into conflict. C) there is an agreement among firms to charge the same price or otherwise not to compete. D) firms refuse to follow their price leaders.
The decline in the measured unemployment rate that results when people who want to work, but who cannot find work, drop out of the ranks of the unemployed and the labor force is the
A. disguised unemployment effect. B. discouraged-worker effect. C. leisure-preference effect. D. surplus labor effect.