Demand for one item goes down when the price of another item goes down. These items must be
A. substitutes.
B. inferior goods.
C. normal goods.
D. complements.
Answer: A
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When Taylor raised the price of earrings at Taylor's Boutique, her total revenue from selling earrings increased. This suggests that:
A. there are many other boutiques competing with Taylor. B. the demand for Taylor's earrings at the original price was elastic. C. there was excess demand for earrings at the original price. D. the demand for Taylor's earrings at the original price was inelastic.
Refer to the figure below. There would be an excess supply of 25 at a price of ________. 
A. $35 B. $20 C. $45 D. $50
Assume that the central bank increases the reserve requirement. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. Real GDP falls, and nominal value of the domestic currency rises. b. Real GDP rises, and nominal value of the domestic currency falls. c. Real GDP rises, and nominal value of the domestic currency rises. d. Real GDP rises, and nominal value of the domestic currency remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
The basic tools of supply and demand are central to microeconomic analysis but are of little use to macroeconomics
a. True b. False Indicate whether the statement is true or false