Suppose the federal government provides wheat farmers with an effective price floor, or a guaranteed minimum price. Which of the following is likely to be true?
a. The price floor set by the government is higher than the equilibrium price.
b. It will increase economic welfare.
c. It will cause an excess demand for wheat in the market.
d. The market is likely to remain in equilibrium even after the price floor is imposed.
a
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If the government uses stabilization policies to reduce inflation, the economy may have to suffer
A. higher rates of real GDP growth. B. higher rates of unemployment. C. lower rates of unemployment. D. higher rates of price level growth.
The hourly wage rate is the opportunity cost of one hour of leisure because
A) the person's substitution effect exceeds his or her income effect. B) that is what a person gives up to enjoy the hour of leisure time. C) the person must work for a living. D) the person prefers leisure to work regardless of the wage.
Abby bakes brownies and Liam grows flowers. In which of the following cases is it impossible for both Abby and Liam to benefit from trade?
a. Abby does not like flowers and Liam does not like brownies. b. Abby is better than Liam at baking brownies and Liam is better than Abby at growing flowers. c. Liam is better than Abby at baking brownies and at growing flowers. d. Both Abby and Liam can benefit from trade in all of the above cases.
The fact that, for most of its history, the Fed was reluctant to make discount loans actually:
A. pushed the discount rate above the target federal funds rate. B. at times was a destabilizing force for financial markets. C. proved to be a very stabilizing force for financial markets. D. resulted in banks in very strong financial shape as being the only ones borrowing from the Fed.