In the short-run, if the Federal Reserve increases interest rates, then consumption and investment ________, aggregate expenditure ________, and short-run equilibrium output ________.
A. increase; decreases; decreases
B. increase; increases; increases
C. decrease; decreases; decreases
D. increase; increases decreases
Answer: C
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The price of a new textbook increases from $120 to $160, while the price of used copies of the textbook increased from $80 to $100. Other things being equal, we would expect
A) the quantity demanded of the used textbook to increase and the quantity demanded of the new textbook to decrease. B) the quantity demanded of both to fall. C) the demand for the new textbook to increase and the demand for the used textbook to decrease. D) the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase.
If the reserve ratio is 5 percent, then $1,000 of additional reserves can create up to
a. $5,500 of new money. b. $5,000 of new money. c. $4,000 of new money. d. None of the above is correct.
When firms are faced with repeating games, such as the prisoner's dilemma, they:
A. will tend to act more like perfectly competitive firms. B. are more likely to collude. C. are less likely to collude. D. will be more likely to renege on agreements.
The two alternative ways of promoting better outcomes when a natural monopoly exists are:
A. Subsidy and taxation B. Public ownership and regulation C. Pricing and incorporation D. Breaking and merging