When the Federal Reserve reduces its target rate of inflation, it will set a ________ real interest rate at every inflation rate and the aggregate demand curve will ________.
A. lower; shift to the right
B. higher; shift to the left
C. lower; shift to the left
D. higher; shift to the right
Answer: B
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If an increase in income leads to a decrease in the demand for salami, then salami is
A) a necessity. B) a neutral good. C) a normal good. D) an inferior good.
Suppose we can represent Brandon's preferences for water with an expected utility function U(WR, WD) = (1/4)?WR + (3/4)?WD, where WD represents a quantity of water during a drought and WR represents a quantity of water in a rainy season. Brandon is:
A. risk averse. B. risk neutral. C. risk loving. D. There is not enough information to answer this question.
Which of the following is most accurate?
A. In all cases, competitive markets yield more consumer surplus than would be enjoyed in a monopoly market with the same cost structure. B. In all cases, competitive markets yield less consumer surplus than would be enjoyed in a monopoly market with the same cost structure. C. In some cases, competitive markets can yield less consumer surplus than would be enjoyed in a monopoly market with the same cost structure. D. In all cases, competitive markets yield the same consumer surplus that would be enjoyed in a monopoly market with the same cost structure.
Which of the following is counted in GDP?
A) the value of goods and services produced in the underground economy B) the cost of a speed boat purchased by drug smugglers C) the value of do-it-yourself work D) the value of leisure