Which of the following statements best describes the central bank response to inflation?
a. If inflation threatens, the central bank uses expansionary monetary policy to reduce the supply of money, reduce the quantity of loans, raise interest rates, and shift aggregate demand to the right.
b. If inflation threatens, the central bank uses expansionary monetary policy to reduce the supply of money, reduce the quantity of loans, raise interest rates, and shift aggregate demand to the left.
c. If inflation threatens, the central bank uses contractionary monetary policy to reduce the supply of money, reduce the quantity of loans, raise interest rates, and shift aggregate demand to the right.
d. If inflation threatens, the central bank uses contractionary monetary policy to reduce the supply of money, reduce the quantity of loans, raise interest rates, and shift aggregate demand to the left.
d. If inflation threatens, the central bank uses contractionary monetary policy to reduce the supply of money, reduce the quantity of loans, raise interest rates, and shift aggregate demand to the left.
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Unlike a firm in pure competition, a monopolist may be able to
a. block the entry of new firms into the industry. b. continue to earn economic profits in the long run. c. earn economic profits in the short run. d. both block the entry of new firms into the industry and continue to earn economic profits in the long run.
Which of the following statements is true about a consumer's optimal decision when indifference curves are concave?
A) Both goods are consumed. B) No goods are consumed. C) Only one of the goods is consumed. D) It occurs at the point of tangency with the budget line.
An expected future increase in the price of gasoline may
A) increase the demand for gasoline now. B) decrease the demand for gasoline now. C) increase the supply of gasoline now. D) make gasoline an inferior good.
Division of _______ is the way a good or service that is produced is divided into a number of tasks that are performed by different workers, instead of all the tasks being done by the same person.
a. resources b. labor c. money d. tasks