Although ________ currency is lighter than coins made of metals, a disadvantage arising from modern technology is the ease of ________
A) paper; transport
B) commodity; counterfeiting
C) fiat; transport
D) paper; counterfeiting
D
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In an economy where aggregate spending is given by Y = 3,000 + .75Y - 10,000 r, the central bank is currently setting the interest rate at 0.06 (6 percent). If potential output equals 9,500, the central bank must ________ the interest rate to close the ________ gap.
A. raise; expansionary B. lower; recessionary C. lower; expansionary D. raise; recessionary
It is a "given" that an individual firm selling in a perfectly competitive market will take the market price because
A. there are no good substitutes for the firm's product. B. product differentiation is reinforced by extensive advertising. C. the firm's demand curve is downward-sloping. D. each producer supplies a negligible fraction of total market.
The Bubby Gum factory produces bubble gum. Joanne is one of the employees, and she produces 10 packs of bubble gum per hour. Joanne's money wage rate is $12 per hour. If a packet of bubble gum sells for $1.00, then
A) Joanne is creating a $2.00 per hour profit for the firm. B) Joanne is creating a $2.00 per hour loss for the firm. C) the Bubby Gum company should pay Joanne more. D) the Bubby Gum company should decrease the price of the bubble gum so it sells more and makes a larger profit. E) None of the above answers is correct because more information about Joanne's real wage is needed to decide what to do.
In the above figure, the economy initially is at point C. Then the domestic price level rises by 10. A
A) substitution effect would help move the economy to point D. B) substitution effect would help move the economy to point B. C) substitution effect would keep the economy at point C. D) wealth effect would help move the economy to point B.