Imagine you own an ice cream store in New York City. Unpredictable inflation hurts your business because:
What will be an ideal response?
- when prices change in unpredictable ways, it makes it difficult for the business to make planschecked
- high inflation will reduce the real value of savingschecked
- low inflation will increase the real interest ratechecked
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How would a decrease in the cost of production affect the market for video games?
a. Supply would decrease, leading to an increase in price and a reduction in quantity sold. b. Supply would decrease, leading to a reduction in price and a reduction in quantity sold. c. Supply would increase, leading to an increase in price and an increase in quantity sold. d. Supply would increase, leading to a reduction in price and an increase in quantity sold.
The financial and opportunity costs consumers pay when looking for a good or service:
a. supply shock b. shortage c. excess supply d. disequilibrium e. search costs
Which of the following will NOT occur in the short run when the money supply decreases?
A. The interest rate will increase. B. The price level decreases. C. People will buy fewer goods and services. D. Aggregate supply decreases.
When economic rent exists
A. resources are allocated efficiently. B. the price is equal to the opportunity cost of the resources. C. price is the same as the discount rate. D. resources are allocated inefficiently.