Suppose that the expected return on bonds falls relative to other assets. In the bond market this will result in:
A. a movement down the bond demand curve.
B. the bond supply curve shifting left.
C. an increase in the price of bonds.
D. a shift to the left of the bond demand curve.
Answer: D
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Macland can produce 210 sweaters or 30 airplanes. Microland can produce 150 sweaters or 10 airplanes. Since Macland can produce more than Microland,
a. Macland will benefit from trading, but Microland will not as it does not have an absolute advantage. b. neither country will benefit from trade because Macland has an absolute advantage in both goods. c. both Macland and Macroland will benefit as the opportunity costs are different. d. Microland will benefit, but Macroland will not because it has an absolute advantage in both goods.
Suppose at the prevailing interest rate of 4 percent the money supply and the quantity of money demanded are both $2 trillion. At a 5 percent interest rate, the quantity of money demanded is $1.5 trillion, while at a 3 percent interest rate it is $2.5 trillion. If the Fed conducts an open-market purchase of $50 billion, and if the money multiplier is 10, then at what interest rate will the money
supply equal the quantity of money demanded? a. An interest rate of 5 percent and a quantity of $1.5 trillion. b. An interest rate of 4 percent and a quantity of $2 trillion. c. An interest rate of 3 percent and a quantity of $2.5 trillion. d. An interest rate of 4 percent and a quantity of $2.5 trillion.
If the government raised land taxes $20/acre, this would increase the farmer's average fixed cost. How would that affect (a profit maximizing) farmers' decision about the quantity of corn to produce in the short run?
a. It would have little change because in the short run the farmer will consider only the Average Variable Cost (AVC) in making a decision on quantity supplied b. It will decrease the quantity the farmer is willing to supply because the Average Variable Cost (AVC) will increase for the farmer c. It will decrease the quantity the farmer is willing to supply because the farmer considers all costs in the short run in making a decision about quantity supplied d. None of the above
The location of the product supply curve depends on the:
A. production technology. B. number of buyers in the market. C. tastes of buyers. D. location of the demand curve.