Why does quantity demanded decrease when price increases?
a. People choose to reduce consumption of the item.
b. People "drop out" of the market for the item.
c. People find substitutes for the item.
d. All of the above are correct.
d
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In the Fable of the Bees, it was found that contrary to popular belief among economists, but consistent with the Coase Theorem
a. apple growers would pay bee keepers for pollination services. b. bee keepers would pay orchard owners for access to their flowering trees. c. apple growers and bee keepers would reimburse each other for increasing output. d. the transactions costs of negotiating prevented any agreements from being reached between orchard owners and bee keepers.
A purchase of government bonds from the public by the Federal Reserve Banks
A) adds to the money stock. B) has the effect of pulling wealth and therefore money out of the private sector. C) increases the money stock directly and simultaneously increases commercial bank reserves. D) puts additional reserves into the commercial banking system. E) reduces the wealth of the public.
A good measure of a country's level of economic integration with a currency area is
A) the intersection of DD and GG. B) the country's price level. C) the compatibility of economic policies. D) the intersection of AA and GG. E) the extent of trade between the joining country and the currency area and the ease with which labor and capital can migrate between the joining country and the currency area.
To judge the size of government debts and deficits, we should use real values
a. True b. False