Newspaper reports about good news in the economy are often followed by declines in stock and bond prices because
a. the Fed reacts in anticipation of the news to prevent speculation
b. financial markets are often irrational
c. financial markets prefer recessions to spending shocks
d. stock and bond holders fear the Fed's reaction to possible overheating
e. newspapers may be confused about the performance of financial markets
D
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Suppose the people of Florencia spend $60 and save $40 for every $100 they earn. In this case, the marginal propensity to save equals _____
a. 0.2 b. 0.7 c. 0.4 d. 0.8
Which of the following is a long-run adjustment?
A. A firm hires two new workers. B. The number of professional baseball teams increases by two. C. GM buys more steel for its auto plants in Michigan. D. A farmer buys twice the usual amount of fertilizer.
The marginal cost of pollution abatement is the
A) additional cost to clean up an additional unit of pollution. B) additional benefit from cleaning up an additional unit of pollution. C) total social costs of pollution clean-up divided by total social benefits. D) total social costs of pollution clean-up divided by the total units of clean-up.
The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the consumer surplus?
A) area A + area B + area C B) area A + area F C) area C + area D + area E + area G D) area A E) area F