The increase in spending that occurs because the real value of money increases when the price level falls is known as the
A) price effect. B) wealth effect.
C) interest rate effect. D) international trade effect.
B
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An arrangement in which Kathleen sells some of her barley when it is planted, with the promise to deliver it and receive payment after it is harvested, is called
A) a savings contract. B) a deferred private bond. C) a futures contract. D) a commodity transfer.
The above figure shows Jane's budget line and two of her indifference curves. Which of the following happens to Jane's budget line if there were a decrease in her monthly dining out budget?
A) It would bend toward the origin, becoming more convex. B) It would bend away from the origin, becoming more concave. C) It would shift rightward and not change its slope. D) It would shift leftward and not change its slope.
If mortgages and houses are complements in consumption and interest rates decrease, we would expect to see
a. An increase in demand for houses b. An decrease in demand for houses c. An increase in the quantity of houses demanded d. An decrease in the quantity of houses demanded
If stock prices follow a random walk, then stock investors can make large profits by
a. buying stocks whose prices have been falling for several days. b. buying stocks whose prices have been rising for several days. c. performing fundamental analysis of stocks using data contained in annual reports. d. using inside information.