Refer to the above graph. A decrease in supply would best be reflected by a change from:
a. Point 2 to point 1
b. Point 3 to point 6
c. Point 5 to point 2
d. Point 5 to point 1
Answer: a. Point 2 to point 1
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In the above figure, a rent ceiling of $500 per month would
A) not affect the equilibrium quantity. B) create a shortage. C) raise the rent and cause a surplus. D) reduce the rent and create a surplus.
The above table gives the market demand and market supply schedules for soda. What is the minimum price that producers are willing to accept for the 400th can of soda?
A) $0.40 per can B) $0.50 per can C) $0.60 per can D) $0.70 per can
Milton Friedman, a leading monetarist, believes the Fed should not manage the money supply in a discretionary manner. Which of the following statements is NOT a reason for Friedman's belief?
A. The limitations of our knowledge make any discretionary policy very unpredictable. B. The past performance of the Fed has not given a strong indication that it has the ability to regulate the money supply in such a manner. C. Friedman advocates the rule of steady monetary growth. D. Discretionary monetary policy promotes confidence within the business community by providing a greater amount of stability to money and credit.
Incompleteness of a contract can be considered boundedly rational if at the time the parties draft the agreement they do not know how they can best react to certain contingencies
Indicate whether the statement is true or false