If a hurricane were to wipe out the majority of the eastern seaboard in the United States:
A. only the long-run aggregate supply curve would shift left.
B. the long-run and short-run aggregate supply curves would both shift left.
C. only the short-run aggregate supply curve would shift left.
D. neither the short-run nor long-run aggregate supply curves would be affected.
B. the long-run and short-run aggregate supply curves would both shift left.
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"Most textiles worn by American consumers are produced in Asian and South American countries where the opportunity costs of production are lower." This observation refers to the:
a. law of supply. b. income elasticity of demand. c. principle of beneficial tariffs. d. principle of comparative advantage. e. law of decreasing returns to scale.
A firm will increase its spending on advertising until
A) it has monopolized the market B) it has deterred all future entry C) the marginal benefit of advertising is zero D) the marginal benefit of advertising equals the marginal cost of advertising
A student receives a five-year loan to pay for a $2,000 used car. The lender and the student agree to an 8% interest rate on a fixed-rate loan. Expected inflation was estimated to equal 2.5%, but unexpectedly decreases to 2%. Which of the following is true?
A. The real interest rate decreased. B. Both the student and the lender benefit. C. The lender is made worst off because his real return on the car loan is lower. D. The student is made worse off because her real cost of borrowing is higher.
The real exchange rate is an adjustment of the nominal exchange rate to account for
a. inflation at home and abroad b. supply and demand in the market c. government's assessment of its value d. currency amounts held by governments e. none of the above