The entrance of the U.S. into the Korean War in June of 1950 led to:
a. deflation.
b. an increase in the unemployment rate.
c. a long and deep recession.
d. a surge in consumer demand.
e. All of the above.
d. a surge in consumer demand.
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The "lemons problem" in the used car market arises from
A) the difficulty U.S. producers have in making reliable cars. B) the difficulty buyers have in distinguishing good cars from lemons. C) the tendency of buyers of used cars to pay for them with bad checks. D) the reluctance of many car dealers to handle used cars.
All of the following are true regarding the relationship between price elasticity of demand and total revenues EXCEPT
A) when market demand is elastic, if the market price declines, then total revenues will rise. B) when market demand is unit elastic, if the market price rises, then total revenues will not change. C) when market demand is inelastic, if the market price falls, then total revenues will decrease. D) when market demand is inelastic, if the market price rises, then total revenues will decrease.
Archie wants to buy a steak for dinner. When he goes by the store, he sees that the price of steak has gone up a lot since the previous week. He decides to buy hot dogs instead. The __________ means that even though Archie has the same amount of money he did last week, that money won’t buy the same amount of steak today.
a. income effect b. substitution effect c. inflationary effect d. deflationary effect
If purchasing-power parity holds but then U.S. prices rise, which of the following move the exchange rate back towards purchasing-power parity?
a. foreign prices rise or the U.S. nominal exchange rate rises b. foreign prices rise or the U.S. nominal exchange rate falls c. foreign prices fall or the U.S. nominal exchange rate rises d. foreign prices fall or the U.S. nominal exchange rate falls