Which of the statements best describes why the aggregate demand curve is downward sloping?
a. As the aggregate price level increases, consumer expectations about the future change.
b. As the aggregate price level decreases, the stock of existing physical capital increases.
c. An increase in the aggregate price level causes consumer and investment spending to fall, because consumer purchasing power decreases and money demand increases.
e. As a good's price increases, holding all else constant, the good's quantity demanded decreases.
Answer: c. An increase in the aggregate price level causes consumer and investment spending to fall, because consumer purchasing power decreases and money demand increases.
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If the consumer price index in 2007 is 25 times that of 1860, and a slave cost $2,000 in 1860, how much is that in terms of 2007 dollars?
a. $12,500 b. $25,000 c. $50,000 d. $75,000 e. $750,000
In the one-input model of production, increasing marginal product implies non-convexity of the producer choice set.
Answer the following statement true (T) or false (F)
A central bank is an institution that
A) pays for government expenditures. B) controls a nation's monetary policy. C) runs a country's stock market. D) determines a nation's fiscal policy.
If Happy Feet chooses to Ad and Best Nails then chooses to No Ad, Happy Feet earns ________ million in net profit and Best Nails earns ________ million.
Happy Feet wants to prevent Best Nails from entering the nail salon market. The above game tree illustrates the different strategies and corresponding payoffs for the two firms. Both Happy Feet and Best Nails have the same strategies of advertising (Ad) or not advertising (No Ad). The payoffs represent net profit in millions.
A) $4; $1
B) $5; $1
C) $2; $3
D) $1; $4