Refer to the accompanying figure. Moving from demand curve D1 to demand curve D2 could be caused by a(n):
A. increase in the price of a close substitute.
B. increase in the price of a complement.
C. decrease in the product's expected future price.
D. increase in quantity supplied.
Answer: A
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If currency speculators decide that the value of the dollar should rise in the future relative to the yen, this will increase the demand for dollars and decrease the supply of dollars
Indicate whether the statement is true or false
If net exports increase by 250 and the mpc is 0.75, equilibrium aggregate output increases by
A) 250. B) 500. C) 750. D) 1000.
Under the liquidity premium theory the shape of the yield curve depends on
A) the relative return of investments in common stocks versus investments in corporate bonds. B) the size of the federal government's budget deficit. C) government tax treatment of long-term versus short-term bonds. D) the expected pattern of future short-term rates and the size of the term premium at each maturity.
Suppose the currency price of the U.S. dollar in terms of the Japanese yen starts to fall. To prevent that from occurring, the U.S. central bank should
A) use U.S. dollars to buy Japanese goods. B) use yen reserves to buy U.S. dollars in the foreign exchange market. C) sell U.S. dollars in the foreign exchange market in exchange for yen. D) buy both U.S. dollars and yen in the foreign exchange market.