Refer to Figure 10.1. If the level of real GDP is initially Y2, spending is ________ production and there is an unexpected ________ in inventories
A) greater than; increase
B) greater than; decrease
C) less than; increase
D) less than; decrease
C
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If a bank has ________ rate-sensitive assets than liabilities, a ________ in interest rates will reduce bank profits, while a ________ in interest rates will raise bank profits
A) more; rise; decline B) more; decline; rise C) fewer; decline; decline D) fewer; rise; rise
With only two goods, if the income effect is in the opposite direction as the substitution effect but the income effect dominates then the good is
a. normal b. inferior but not Giffen c. Giffen d. There is not enough information to answer.
Economic rent is defined as
a. the opportunity cost of a resource b. the payment to a resource in excess of its opportunity cost c. opportunity cost d. total earnings e. the part of a homeowner's housing that is included in GDP accounts
There are very few non-price means of undermining cartel agreements to restrict competition among members
a. True b. False Indicate whether the statement is true or false