Which of the following properly describes the interest-rate effect?
a. A higher price level leads to higher money demand; higher money demand leads to higher interest rates; a higher interest rate increases the quantity of goods and services demanded.
b. A higher price level leads to higher money demand; higher money demand leads to lower interest rates; a higher interest rate reduces the quantity of goods and services demanded.
c. A lower price level leads to lower money demand; lower money demand leads to lower interest rates; a lower interest rate reduces the quantity of goods and services demanded.
d. A lower price level leads to lower money demand; lower money demand leads to lower interest rates; a lower interest rate increases the quantity of goods and services demanded.
d
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If a firm shuts down in the short run and produces no output, its total cost will be
a. zero b. equal to total variable cost c. equal to total fixed cost d. equal to explicit costs only e. impossible to calculate
Compared to the profit-maximizing outcome, marginal cost pricing in natural monopoly leads to
a. reduced demand b. higher price c. reduced consumer surplus d. more economic profit e. greater output
Lou and Alex live together and share household chores. They like to cook some meals ahead of time and eat leftovers. The accompanying table shows the number of rooms they can each clean and the number of meals they can each cook in an hour. Rooms Cleaned Per HourMeals Cooked Per HourLou54Alex33Which of the following is true?
A. Alex has both an absolute advantage and a comparative advantage over Lou in both tasks. B. Alex has a comparative advantage over Lou in cleaning. C. Lou has both an absolute advantage and a comparative advantage over Alex in both tasks. D. Lou has a comparative advantage over Alex in cleaning.
A call option is in the money if the futures price is greater than the strike price.
a. true b. false