If a technological advance takes place in the computer industry, then the equilibrium price of a computer will ________ and the equilibrium quantity will ________
A) fall; increase
B) fall; decrease
C) rise; increase
D) rise; decrease
A
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If the inflation rate increases,
A) the real interest rate rises. B) real GDP growth increases. C) potential GDP increases. D) the nominal interest rate falls. E) the velocity of circulation increases.
Price elasticity of demand measures
A) how responsive sales are to a change in buyers' incomes. B) how responsive quantity demanded is to a change in price. C) how responsive sales are to changes in the price of a related good. D) how responsive suppliers are to price changes.
Which of the following statements about rent seeking is false?
A) A person is engaging in rent-seeking behavior when he uses the political process to acquire ownership of a resource that belongs to the public. B) If a firm can benefit from government intervention in the economy, it is more likely to spend resources attempting to secure this intervention than toward innovating its product to gain a competitive edge in the market. C) Because rent seeking redistributes society's resources, anyone engaging in such behavior is violating the law. D) Rent seeking often involves governments because governments transfer huge amounts of funds that economic agents must compete for.
Which of the following is the least likely take place if the Fed responds to a negative demand shock by reducing the real interest rate?
A) IS shifts to the right B) output gap returns to zero C) inflation returns to its previous rate D) MP shifts down