In the basic 45-degree line model, what is the effect of a decrease in the price level?
a. The expenditure line will shift downward.
b. The expenditure line will shift upward.
c. There will be movement to the left on the expenditure line.
d. There will be movement to the right on the expenditure line.
b
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The above figure illustrates the labor market for fast food restaurants in a small city in Peru. What would be the effects of a minimum wage imposed at $5.50 per hour?
A) unemployment equal to 400 hours B) unemployment equal to 200 hours C) a shortage of 400 hours D) nothing because the minimum wage has no effect on the equilibrium price and quantity
One explanation for the sharp decline in inventory investment during the 2007-2009 financial crisis was ________
A) financing constraints B) the rise in the level of income C) the volatility of interest rates D) the increase in total spending and therefore costs
Consider the same market for nonalcoholic beer as in the previous question. How many "units" of beer will Cudweiser produce?
a. 667 b. 1,667 c. 2,333 d. 3,000
A theory asserts that manufacturers are less willing to sell units of output as the price of a good decreases, ceteris paribus. However, as the price of computers fell throughout the 1990s, more computers were sold. Which of the following best explains the apparent conflict between theory and data? a. The theory must be invalid
b. The theory rests on assumptions that are too simplistic. c. It is likely that variables other than the price and quantity of computers sold were changing. d. All variables other than the price and quantity of computers sold were unchanged.