Why does an increase in supply lead to lower prices?
What will be an ideal response?
When the supply of a good, such as computers, increases, the supply curve shifts rightward. This shift means sellers are more willing and more able to sell computers at all prices than they were before. When this change occurs, a surplus of computers breaks out. With the surplus, the law of market forces drives the price lower and thereby eliminates the surplus.
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The level of GDP, all else held constant, will tend to increase when ________.
A. reserve requirements are increased B. there is an increase in the discount rate C. the federal funds rate is increased D. the Federal Reserve buys government securities in the open market
Above a certain income, the marginal social security tax drops to zero.
Answer the following statement true (T) or false (F)
Sue has a checking account at the First National Bank; her checking account is a(n):
A. liability to Sue until she spends the funds. B. asset to Sue but actually a liability to the Federal Reserve. C. asset to the bank and a liability to Sue. D. asset to Sue and a liability to the bank.
Which of the following is the best example of a "free" good?
A) HIV/AIDS cocktails freely distributed to people in developing countries B) The air you are currently breathing C) Public roads D) Public schooling in states where education is subsidized