Exhibit 20-1 Money market demand and supply curves
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Starting from an equilibrium at E1 in Exhibit 20-1, a leftward shift of the money supply curve from MS1 to MS2 would cause an excess:
A. demand for money, leading people to sell bonds.
B. demand for money, leading people to buy bonds.
C. supply of money, leading people to sell bonds.
D. supply of money, leading people to buy bonds.
Answer: A
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Refer to Table 6-8. What is the most distinctive feature of the supply curve?
A) The supply curve is horizontal. B) The supply curve is upward sloping. C) The supply curve is perfectly elastic. D) The supply curve is perfectly inelastic.
In the language of economics, which of the following would be defined as investment?
a. The purchase of a U.S. savings bond b. The purchase of 100 shares of Ford Motor Company stock c. The deposit of $1,000 into a savings account d. The purchase of $500 worth of gold e. The accumulation of inventories by a firm
Which of the following is an example of a negative externality? a. A Japanese company exports cars to the U.S., which causes American workers to lose their jobs
b. An employee of a chemical company spills acid on his arm, causing severe damage. c. John plants fruit trees in his front yard, which attracts bees, which sting neighbor Mary. d. Sally buys coffee at McDonald's, spills some and burns her hand. e. Jack attempts to fix his roof, falls off, and breaks his leg.
Which of the following is NOT correct for a perfectly competitive firm in long-run equilibrium?
A. MC = MR > LAC B. SAC = LAC C. LAC = P D. MR = P = AR