Suppose a cut in government spending occurs that is at least partially unexpected. Explain what effect this will have on stock prices
What will be an ideal response?
Output falls and interest rates fall. Here, the effects are ambiguous. The drop in the interest rate will raise stock prices while the drop in Y will lower them.
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The unemployment rate equals the number of persons
a. unemployed divided by the number employed. b. unemployed divided by the number in the labor force. c. unemployed divided by the population age 16 and over. d. not working divided by the population age 16 and over.
For a firm in a perfectly competitive market, a price decrease:
A. lowers the profit-maximizing quantity. B. is unrelated to the profit-maximizing quantity. C. increases the profit-maximizing quantity. D. signifies the firm should leave the market.
How can the money supply impact interest rates and investment?
a. M? ? i? ?I??AD??Y? b. M? ? i? ?I??AD??Y? c. M? ? i? ?I??AD??Y? d. M? ? i? ?I??AD??Y?
In which of the following situations is the absolute price elasticity of demand for an item most likely to exceed a value of 1?
A) when there are very few close substitutes for the item B) when there are very few producers of the item C) when the item's share of expenses in consumers' budgets is very small D) when there is considerable time to adjust to a change in the price of the item