Which of the following are possible consequences when the government reduces government purchases to address an inflationary gap?
I. increase in the price of bonds
II. increase in net exports
III. decrease in the federal budget deficit (or increase the surplus)
IV. decrease in the exchange rate
A) I, II, III, and IV
B) I and III only
C) I, III, and IV only
D) II, III, and IV only
Ans: A) I, II, III, and IV
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Suppose the price of capital and labor remain constant but that the average educational level of workers has increased and therefore, productivity of labor increases. This would lead a firm
A) to adopt a more capital-intensive production technology. B) to keep its output and production technology unchanged, but to use fewer units of labor. C) to adopt a more labor-intensive technology. D) to use only labor to produce the product.
One of the predictions of the HO model is that
A) countries with different factor endowments but similar technologies and preferences will have a strong basis for trade with each other. B) countries will tend to specialize, but not completely, in their comparative advantage good. C) reciprocal demand leads to an equilibrium terms of trade by inducing changes in both demand and supply. D) All of the above.
Refer to the above graph, which shows the market for beef where demand shifted from D 1 and D 2. The change in equilibrium from E1 to E 2 is most likely to result from:
A decrease in consumer incomes An increase in the price of pork A decrease in the tax on beef products An increase in the cost of cattle feed
DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a
service that adds an additional $20 to the total cost of the package. What is the marginal cost of adding the engine detailing to the basic detailing package? A) $20 B) $30 C) $60 D) $60 plus the value of his time