Coffee and donuts are complements in consumption. Suppose the economy expands so that consumer income increases, and coffee is a normal good
What impact does this change in the coffee market have on the donut market under a general equilibrium analysis? A) Donut demand shifts rightward and donut price and quantity increase
B) Donut demand shifts rightward, donut price increases, and donut quantity declines
C) Donut demand shifts leftward, donut price declines, and donut quantity increases
D) Donut demand shifts leftward and donut price and quantity decline
D
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The demand for a product is likely to be more elastic:
A. the smaller the share of the total budget spent on the product. B. when more complementary products are available. C. in the short run than in the long run. D. when more good substitutes for the product are available.
Consider a small open economy with desired national saving of Sd = 200 + 10,000rw and desired investment of Id = 1000 - 5000rw. If rw = 0.05, then a rise in government spending of 50 with no change in private saving causes net exports to become
A) 100. B) 50. C) -50. D) -100.
Refer to Figure 12.3. Suppose that after a negative supply shock, the economy is at point X in the IS-MP model and at point B on the Phillips curve. If the Fed has a goal of price stability, the economy would ________ in the IS-MP model and ________ on the Phillips curve.
A) move to point Y; move to point C B) remain at X; move to point A C) move to point Y; remain at point B D) move to point Z; move to point A
If the interest rate increases, there is a(n)
A) increase in the demand for money. B) decrease in the demand for money. C) increase in the quantity of money demanded. D) decrease in the quantity of money demanded.