Figure 3.5 illustrates the supply of tacos. If the government offered a subsidy to Mexican restaurants for each taco they produce, this would most likely cause a movement from:
A. point a to point c.
B. point c to point b.
C. S2 to S1.
D. S0 to S1.
Answer: D
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If real GDP is greater than potential GDP, then to restore equilibrium, ________ and the price level ________
A) the aggregate supply curve shifts rightward; falls B) the aggregate demand curve shifts leftward; rises C) the aggregate supply curve shifts leftward; rises D) the aggregate demand curve shifts rightward; falls E) potential GDP increases; falls
Mika's Manicures leases a space in the local mall for $4,500 a month. For this business, this expense would be considered an:
A. implicit cost of $4,500. B. explicit cost of $4,500. C. explicit cost of $0. D. This is neither an implicit or explicit cost; it is a fixed cost of $4,500.
Assume that the real rate of interest is 5 percent and a lender charges a nominal interest rate of 15 percent. If a borrower expects that the rate of inflation next year will be 10 percent and the actual rate of inflation next year is 12 percent:
a. neither the borrower nor the lender benefits from inflation. b. both the borrower and the lender lose from inflation. c. the borrower benefits from inflation, while the lender loses from inflation. d. the lender benefits from inflation, while the borrower loses from inflation.
Who provides the primary source of funding for a program promoting forward and backward linkages in an LDC?
a. government b. entrepreneurs c. consumers d. workers e. taxpayers