What would happen to the budget line if income increases by the same percentage as the price of the two goods decreases (that is income up by, say, 10 percent and the prices down by 10 percent)?
A. A rightward parallel shift in the budget line
B. A leftward parallel shift in the budget line
C. An upward pivot of the budget line
D. The budget line is unaffected
Answer: D
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The FDIC was created because
A) the Fed kept the required reserve ratio too low. B) banks failed to create money the way the Fed wanted them to. C) people worried about bank failures after World War I, even though very few banks actually failed. D) there were so many bank failures in the 1930s.
If the Japanese buy more Cadillacs, they __________ more yen and __________ more dollars in the foreign exchange market
A) supply; supply B) supply; demand C) demand; supply D) demand; demand
Suppose that the federal government imposes a price floor (support price) in the milk market at a price of $3 per gallon. If market quantity demanded at $3 is 1 billion gallons, and if market quantity supplied is 1.5 billion gallons, then which of the following is true?
a. There is a surplus of 1 billion gallons of milk, and the federal government will buy 1.5 billion gallons to maintain the $3 price. b. There is a shortage of 500 million gallons of milk, and the federal government will buy an additional 500 million gallons to maintain the $3 price. c. There is a shortage of 500 million gallons of milk, and the federal government will buy 1 billion gallons to maintain the $3 price. d. There is a surplus of 500 million gallons of milk, and the federal government will buy this 500 million gallons to maintain the $3 price.
Bob traps lobsters in Maine and sells them to a restaurant in Mexico. Other things the same, these sales
a. increase U.S. net exports and have no effect on Mexican net exports. b. increase U.S. net exports and decrease Mexican net exports. c. decrease U.S. net exports and have no effect on Mexican net exports. d. decrease U.S. net exports and increase Mexican net exports.