Suppose that both the supply of iPads and the demand for iPads decrease. One can predict that the:
A. equilibrium price and quantity will rise.
B. equilibrium quantity will fall, but the change in equilibrium price is uncertain.
C. equilibrium price and quantity will fall.
D. equilibrium price will rise, but the change in equilibrium quantity is uncertain.
Answer: B
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What is meant by the term "optimization"? What do economists usually believe about how individuals optimize?
What will be an ideal response?
A contractionary monetary policy can reduce real GDP if expectations are formed rationally and monetary policy is
A) combined with expansionary fiscal policy. B) carried out in total secrecy. C) publicly announced and credible. D) combined with contractionary fiscal policy.
Which of the following statements about the supply of dollars in the foreign exchange market is true?
A) It is equal to the money supply. B) It represents the demand for U.S. goods and financial assets by firms and households outside the United States. C) It represents the supply of U.S. goods and financial assets by firms and households within the United States. D) It is determined by the willingness of households and firms that own dollars to exchange them for foreign currency.
When economists use the term "ceteris paribus," they mean that: a. the causal relationship between two economic variables cannot be determined. b. the analysis is true for the individual but not for the economy as a whole
c. all other variables except the ones specified are assumed to be constant. d. their conclusions are based on normative rather than positive economic analysis.