Refer to Figure 4-20. The equilibrium price in the market before the tax is imposed is
a. $8.
b. $6.
c. $5.
d. $3.
b
You might also like to view...
Declines in spending on residential construction are often due to increases in interest rates. The collapse in residential construction prior to and during the recession of 2007-2009 was due more to ________ than to higher interest rates
A) the financial crisis that began in 2007 B) rising wages in the construction industry C) the rapid inflation of the early 2000s D) increases in the price of lumber
If prices in Mexico rise at a higher rate than prices in the U.S., then according to purchasing-power parity the U.S. nominal exchange rate with Mexico should rise
a. True b. False Indicate whether the statement is true or false
If at some interest rate desired investment is $400 billion, desired private saving is $600 billion, and the budget deficit is $300 billion, is there a surplus or a shortage in the market for loanable funds? What does this imply would happen to interest rates?
In the above figure, suppose the economy is at a short-run equilibrium at point B and the interest rate is r2. Which of the following policy options for the Fed will help solve the short-run situation?
A. open market sale of government securities B. open market purchase of government securities C. lowering the required reserve ratio D. lowering the differential between the discount rate and the federal funds rate