Suppose that a community seeks to preserve air quality, and zones a “green belt” around the city, which prevents property development within the belt. What is the most likely result of this law?
A. Interest rates will increase.
B. Labor income will increase.
C. Economic rent will increase.
D. Profits will increase.
Answer: C
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Based on the figure below, the economy is initially at point A on the monetary policy reaction function (RF1) and the aggregate demand curve (AD1). The actual rate of inflation is p' and the Federal Reserve's target inflation rate is p*1. If the Federal Reserve raises its target inflation rate to p*3, then the Federal Reserve's monetary policy reaction function will ________ and the aggregate demand curve will ________.
A. shift to RF2; shift to AD2 B. shift to RF3: shift to AD3 C. shift to RF3; shift to AD2 D. shift to RF2: shift to AD3
The equilibrium exchange rate is 0.70 euros per dollar. At this exchange rate, the quantity demanded equals the quantity supplied and is $1.3 trillion a day. If the exchange rate is now 0.80 euros per dollar, then
A) there is a shortage of dollars and the exchange rate falls. B) there is no change. C) there is a surplus of dollars and the exchange rate falls. D) there is a surplus of dollars and the exchange rate rises. E) there is a shortage of dollars and the exchange rate rises.
The "law of demand" is illustrated by a
A) rightward shift of the demand curve. B) leftward shift of the demand curve. C) movement along the demand curve. D) Both answers A and B are correct.
Alex received a four-year scholarship to State U. that covered tuition and fees, room and board, and books and supplies. If Alex becomes a full-time student, then:
A. the opportunity cost of attending State U. includes the sum of the benefits Alex would had from attending each of the other schools to which he was admitted. B. Alex has no incentive to study hard while at State U. C. the opportunity cost of attending State U. includes the money Alex could have earned working for four years. D. attending State U. for four years is costless for Alex.