When the market price of a product is below the equilibrium price, shortages will result and sellers can be expected to reduce the supply of that product
a. True
b. False
Indicate whether the statement is true or false
False
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An economist claims that any point not on a production possibilities frontier cannot be best. What is his reasoning to support this?
A. A point inside the frontier implies that society is not facing up to the problem of scarcity. B. A point inside the frontier limits growth, and growth is always a goal worth pursuing. C. A point inside the frontier represents inflation, and inflation is a dangerous situation. D. A point inside the frontier results in fewer goods, and more is always better. E. A point inside the frontier is inefficient and represents wasted resources.
Use the following graph to answer the next question.
Assume that the economy initially has a price level of P1 and output level Q1. If the government implements expansionary fiscal policy, it would bring the economy to
A. P2 and Q4. B. P2 and Q2. C. P1 and Q1. D. P1 and Q3.
The long-run money demand curve shows
A) that the value of money influences the quantity of money that households and firms plan to hold. B) how the Fed determines the appropriate interest rate. C) the relationship between real GDP and money demand. D) that the value of money is directly related to the quantity of money demanded. E) the relationship between potential GDP and money demand.
You start with a portfolio valued at $500. Over the next twelve months it loses 40%; the following year it has a gain of 30%. At the end of two years your portfolio is worth:
A. $450. B. $410. C. $390. D. $300.