Jennifer learns that the price of CDs will be going up 10 percent next week. She usually buys three CDs per week. What happens to Jennifer's demand for CDs this week?
a. It does not change because only quantity demanded changes when price changes.
b. It increases because the price will be lower next week.
c. It decreases because the price will be higher next week.
d. It increases because the price will be higher next week.
e. It decreases because the price will be lower next week.
D
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The appropriate monetary policy in the event of a recessionary gap would be to
A) raise the required reserve ratio. B) increase the difference between the federal funds rate and the required reserve ratio. C) engage in an open market purchase of U.S. government securities. D) increase the difference between the discount rate and the federal funds rate.
The case of New Zealand, described in the text, is concerned with the country's
A) prospects for long term growth. B) ability to sustain current account deficits. C) unproductive industrial sector and its prospects for long run growth. D) labor productivity. E) exchange rate volatility relative to other currencies.
A situation in which output decreases while prices increase is often referred to as:
A. inflation. B. negative economic growth. C. a recession. D. stagflation.
A purely competitive seller should produce (rather than shut down) in the short run:
A. only if total revenue exceeds total cost. B. only if total cost exceeds total revenue. C. if total revenue exceeds total cost or if total cost exceeds total revenue by some amount less than total fixed cost. D. if total cost exceeds total revenue by some amount greater than total fixed cost.