Stock market bubbles typically lead to all of the following except:
A. patterns of volatile returns from the stock market.
B. gaps between actual stock prices and those warranted by the fundamentals.
C. an efficient allocation of resources.
D. stock market crashes.
Answer: C
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When existing firms leave a perfectly competitive industry, ________
A) the equilibrium price decreases, while the equilibrium quantity increases B) the equilibrium price increases, while the equilibrium quantity decreases C) both the equilibrium price and quantity increase D) both the equilibrium price and quantity decrease
Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. If the price of loose-leaf tea rises from $3 to $4, the market quantity demanded would
A) decrease by 32 lbs. B) increase by 64 lbs. C) decrease by 64 lbs. D) increase by 32 lbs.
The short-run effect of a negative supply shock is
A) lower inflation and a declining output gap. B) lower inflation and an increasing output gap. C) higher inflation and a declining output gap. D) higher inflation and an increasing output gap.
A pound of steak costs $10 in the U.S. and 56.25 riyals (the currency of Saudi Arabia) in Saudi Arabia. If the real exchange rate is 2/3, what is the nominal exchange rate? Show your work