An increase in nominal GDP (with inflexible prices) results in:
a. an increase in the nominal rate of interest.
b. an increase in the U.S. dollar exchange rate.
c. a decrease in the nominal rate of interest.
d. increased price and wage flexibility.
Ans: a. an increase in the nominal rate of interest.
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Rent controls encourage investment in housing because they bring stability to the market.
Answer the following statement true (T) or false (F)
The average total cost curve
A) is U-shaped. B) diminishes initially because average fixed costs diminish. C) increases eventually because of diminishing returns. D) All of the above answers are correct.
When market wages increase in a perfectly competitive market, then
A) the marginal factor cost increases. B) the marginal product increases. C) the marginal factor cost decreases. D) the marginal product decreases.
Refer to the above figure for the corn market. The government wants to set an effective price support in the corn market. To be effective the price should be set
A. at P2. B. at P1. C. at P3. D. below P1.