The cycle of increased market demand that leads to ________ and then a(n) ________ in the market supply curve has caused many firms bankruptcy.
A) underexpansion; decrease
B) underexpansion; increase
C) overexpansion; decrease
D) overexpansion; increase
D) overexpansion; increase
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If the central bank buys foreign assets,
A) the domestic monetary base will decline. B) domestic short-term interest rates will decline. C) the foreign-exchange value of the domestic currency will rise. D) its holdings of international reserves will rise.
Dry cleaning of clothing produces air pollutants. Therefore, in the market for dry cleaning services, the equilibrium price
A) and output are too low to be optimal. B) and output are too high to be optimal. C) is too low to be optimal, and equilibrium quantity is too high. D) is too high to be optimal, and equilibrium quantity is too low. E) is optimal, but there is an excess supply.
The number of cases of Coca-Cola bought increased by 50 percent when the price of pretzels declined by 10 percent. Assuming other factors are held constant, Coca-Cola and pretzels are classified as:
a. complements. b. unrelated goods. c. substitutes. d. social goods.
In the equation of exchange, an increase in M of 8 percent could be accompanied by changes in velocity, the price level and real GDP of:
a. -2%, 3%, 3%. b. 4%, 0%, 4%. c. 2%, 8%, 8%. d. 8%, 8%, 4%.