According to the law of supply, the quantity supplied is _____ related to price, other things constant.
A) inversely
B) negatively
C) directly
D) indirectly
E) never
Answer: C. directly
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You buy a bond for $1,000 from the federal government, which guarantees that you will receive $70 a year forever. Thus, 7 percent was the market rate of interest when you bought the bond. Suppose that immediately after you buy the bond, the market rate of interest goes to 10 percent. The market value of your bond
a. could be more or less than $1,000 b. will be less than $1,000 c. will be more than $1,000 d. will remain unchanged e. will be $1,000
An example of a good or service that would not count in the U.S. GDP would be:
A. a car made by Toyota in Tennessee. B. a car made by Ford in Michigan. C. sneakers made by Nike in Indonesia. D. sneakers made by New Balance in Ohio.
Who is considered to be a free rider according to economists?
In what way do policy makers have to face a trade-off between inflation and unemployment?
a. The cost of reducing inflation by restrictive fiscal and monetary policies is a temporary increase in unemployment. b. The cost of reducing inflation by restrictive fiscal and monetary policies is a permanent increase in unemployment. c. The cost of reducing unemployment by expansionary fiscal and monetary policies is virtually nonexistent. d. The cost of reducing unemployment by expansionary fiscal and monetary policies involves higher inflation during recessions.