Suppose the price of coffee falls. Other things constant, what will not happen?
A) People will consume more coffee.
B) People will consume more cream.
C) The demand for coffee will rise.
D) The demand for cream will fall.
E) More people will now consider drinking bottled water.
C
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When Federal Reserve Banks add to their holdings of government securities,
A) commercial banks must reduce their net lending. B) commercial bank reserves increase. C) the Fed is extending less credit to the economy. D) the stock of money declines.
When a recession hits, we would expect the government to run a budget deficit by raising the level of its spending or by cutting taxes, or perhaps both. The Fed would be expected to:
A. reduce the required reserve ratio, increase the discount rate, and buy securities on the open market. B. reduce the required reserve ratio, reduce the discount rate, and sell securities on the open market. C. reduce the required reserve ratio, reduce the discount rate, and buy securities on the open market. D. increase the required reserve ratio, reduce the discount rate, and sell securities on the open market.
Which is true of a price discriminating pure monopolist?
A. P > MR for the last unit sold. B. Profit will be lower than in the nondiscriminating case. C. Allocative inefficiency will be greater than in the nondiscriminating case. D. The average price will be higher than in the nondiscriminating case.
To answer the following question, please refer to the figure below. Concentrating only at the lower right quadrant, discuss the effects of a change in U.S. expected inflation
What will be an ideal response?