Suppose a change in the stock market makes people feel wealthier, increases consumption, and shifts the aggregate-demand curve right. The change in the stock market must have been
a) an increase in stock prices.
b) a decrease in stock prices.
c) the stock market has no effect on wealth and consumption.
d) no change in stock prices.
Ans: a) an increase in stock prices.
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If the central bank targets interest rates, then the LM curve is
a. vertical. b. horizontal. c. upward sloping. d. downward sloping.
In which of the following market structures with two identical firms do both firms produce more than the Cournot outcome?
A) Stackelberg Oligopoly B) Cartel C) Perfect Competition D) None of the above
As the price level decreases real GDP demanded increases because
A. consumer wealth increases. B. net exports decrease. C. interest rates decrease and cause lower investment. D. net exports are indeterminant .
Higher prices for natural resources are
a. a natural and inevitable result of resource depletion. b. not possible for more than a short time, as technological advances clearly guarantee falling resource prices. c. not the story of the last two centuries, because resource prices have declined through most of this period. d. the major cause of resource shortages in the world.