If autonomous consumption decreases, which of the following is the most likely effect in the short run?
a. a decrease in output, an increase in money demand, and an increase in the interest rate
b. an increase in output, a decrease in money demand, and a decrease in the interest rate
c. a decrease in output, a decrease in money demand, and a decrease in the interest rate
d. an increase in output, an increase in money demand, and a decrease in the interest rate
e. an increase in output, an increase in money demand, and an increase in the interest rate
C
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Suppose the demand curve for bus travel is downward sloping, and the income elasticity of demand for bus travel is negative.
(i) Design an indifference curve-budget line diagram showing the substitution and income effects created when the price of bus travel falls. In your diagram, place bus travel on the horizontal axis and all other goods on the vertical axis. (ii) How you can tell from your diagram that the income elasticity of demand for bus travel is negative? Explain.
The M2 money multiplier is
A) negatively related to high-powered money. B) positively related to the time deposit ratio. C) positively related to the required reserve ratio. D) positively related to the excess reserves ratio.
Which of the following are factors of production?
a. The outputs generated by the production process transforming land, labor, and capital in to goods and services. b. Restricted to the land resources such as natural resources that are unimproved by human economic activity. c. Land (natural resources), labor (human capital, entrepreneurship), and capital (constructed inputs such as factories). d. Just labor and capital in industrialized countries, where natural resources are no longer used to produce goods and services.
The welfare loss due to a price floor
a. is caused by a decrease in quantity b. is the dollar difference between producer surplus and consumer surplus c. is measured as the area above the market price and below the demand curve d. is measured as the area above both the market price and the supply curve e. is a Pareto improvement