A new fad dramatically increases the demand for donut-holes, the leftovers produced from donut production. According to economic theory, one would expect
A. the price of donuts to fall.
B. that one cannot tell.
C. the price of donuts to stay the same.
D. the price of donuts to rise.
Answer: A
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Suppose the price of water rose sharply. Other things constant, what is the least likely to occur?
A) People will consume less water. B) Fewer swimming pools will be filled with water. C) More high-pressure showerheads will be sold. D) The demand for water will fall.
A “backstop resource” is a close substitute for a depletable resource that is available in almost unlimited supply but at a higher cost. Shale oil is a backstop resource for crude oil. Which of the following statements is correct?
A. The production of shale oil is likely to increase over time even if crude oil is still available. B. Shale oil is unlikely to be produced until all the crude oil has been depleted. C. The existence of shale oil as a backstop resource will discourage firms from seeking new reserves of crude oil. D. In the future, shale oil is likely to be produced at the same time as crude oil and to sell for a lower price.
If UIP holds and if the home currency is expected to depreciate, then:
a. the home interest rate must be greater than the foreign interest rate. b. interest rates cannot be changing. c. the home interest rate must be less than the foreign interest rate. d. Not enough information is provided to answer the question
In the United Kingdom accountability and transparency for its central bank is achieved by setting:
A. a numerical target for economic growth. B. numerical targets for economic growth and the exchange rate. C. an explicit numerical target for inflation. D. a numerical target for unemployment each year.