A year-long drought that destroys most wheat crops for the season would shift the:
A. short-run aggregate supply curve only.
B. aggregate demand curve only.
C. aggregate demand curve, and the short-run aggregate supply curve would shift in response.
D. short-run aggregate supply curve and the long-run aggregate supply curve.
Answer: A
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Suppose Motorland's government imposes a tax of $1.50 per gallon of gasoline sold. With the tax, the market will
A) underproduce by 0.2 million gallons of gasoline a month. B) underproduce by 0.1 million gallons of gasoline a month. C) overproduce by 0.1 million gallons of gasoline a month. D) produce the efficient quantity of gasoline.
From 2007 to 2008, the Federal Reserve System reduced interest rates, the price which borrowers pay. As a result, economists expected the quantity of money demanded to
a. increase. b. decrease. c. not change. d. not change, although the demand schedule itself will shift outward.
Interest rates and the price of old or existing bonds are
A) directly related. B) independent of each other. C) inversely related. D) sometimes directly related and sometimes inversely related. E) There is not enough information to answer the question.
Show graphically and explain the effects of imposition of a quota by a small country under competitive conditions. The quota rights are given away for free to a fixed set of import distributor firms in the country.
What will be an ideal response?