A new government study reveals that daily consumption of peanut butter increases life expectancy by 10 years. What will this do to the input markets for peanuts and peanut butter factory workers? Assuming bologna is a substitute for peanut butter, what will happen in the market for bologna factory workers?
The demand for peanut butter will increase, and this will cause the demand for peanut butter inputs to increase as well. We would expect a rise in the price of peanuts and an increase in the wages of peanut butter factory workers. The quantity supplied of both should also increase. If fewer people now buy bologna, its demand will drop, as will the demand for bologna factory workers. Their wages should decline as well.
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The Federal Reserve will engage in a repurchase agreement when it wants to ________ reserves ________ in the banking system
A) increase; permanently B) increase; temporarily C) decrease; temporarily D) decrease; permanently
An increase in the excise tax on alcohol
a. will have no effect on alcohol consumption. b. will generate minimal tax revenues for the federal government. c. coupled with a uniform drinking age nationwide would save lives. d. will generate substantial revenues is demand is elastic. e. all of the above.
In order to maximize utility, a consumer should allocate money income so that
A) the marginal utility of the last unit of each product consumed is greater than the total utility of each product consumed. B) the total utility derived from each product consumed is the same. C) the marginal utility obtained from the last dollar spent on each product is the same. D) the elasticity of demand on all products purchased is the same.
If you are told that the government had an actual budget deficit of $50 billion, then you would:
A. Know that fiscal policy was expansionary B. Know that fiscal policy was contractionary C. Know that fiscal policy was producing a cyclical deficit D. Not be able to determine the direction of fiscal policy from the information given