The average sale price of a home in the United States increased from $207,000 to $297,000 from 2000 to 2005. All else equal, we would expect that during the same time the quantity of new homes supplied
A. did not change.
B. also increased.
C. decreased.
D. changed directly in proportion to changes in the population.
Answer: B
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When oranges increase in price, the income effect
A) decreases the consumption of oranges only if oranges are a normal good. B) decreases the consumption of oranges only if oranges are an inferior good. C) always increases the consumption of oranges. D) always decreases the consumption of oranges.
In the long run
A. all costs are variable. B. total variable cost equals total fixed cost. C. total fixed cost is greater than total variable cost. D. all costs are fixed.
Suppose a contractionary monetary policy raises nominal interest rates. If this is the case, it follows that the contractionary monetary policy must have:
A. reduced expected inflation. B. increased real interest rates more than it reduced expected inflation. C. increased expected inflation. D. increased expected inflation more than it reduced real interest rates.
Suppose there is a reduction in the expected future interest rate. This will cause which of the following to occur?
A) the IS curve to shift left in the current period B) the IS curve to shift right in the current period C) the LM curve to shift up in the current period D) the LM curve to shift down in the current period