If the producers bear a larger portion of tax incidence than the buyers, which of the following must be true?
A. Their supply curve must be more elastic than the buyers demand curve.
B. Their supply curve must be more inelastic than the buyers demand curve.
C. They are not as business savvy as the buyers.
D. They face a very inelastic demand.
Answer: B
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The name of the rate that equalizes the prices of internationally traded goods between countries is called the
a. international interest rate. b. arbitrage rate. c. purchasing power parity rate. d. foreign exchange rate.
Negative supply shocks confront the Fed with a dilemma because
a. full employment is no longer possible b. the costs of fulfilling one objective are paid in terms of failure to meet the other c. inflation cannot be prevented considering the reduced supply d. all policy choices are equally undesirable e. such shocks are entirely unpredictable
People will typically buy more of a product if the price increases.
a. true b. false
Deciding to invest in capital is a short-run decision.
Answer the following statement true (T) or false (F)