When demand increases in a perfectly competitive market, the market price:
A. increases in the short run and falls in the long run.
B. decreases in the short run and increases in the long run.
C. increases in the short run and stays permanently higher in the long run.
D. decreases in the short run and stays permanently lower in the long run.
A. increases in the short run and falls in the long run.
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Which of the following is a true statement about equilibrium in the foreign exchange market?
A) Net exports are zero. B) The expected return on domestic assets is equal to the expected return on foreign assets. C) Foreigners wish to purchase the entire supply of domestic assets. D) The relevant central banks meet regularly to choose the equilibrium exchange rate.
The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a(n) ____ economic statement, and the labor head's statement is a(n) ____ economic statement
a. normative; normative b. normative; positive c. positive; normative d. positive; positive e. proper; improper
The lemons model predicts that:
A. if there are low-quality goods in the market, there will be fewer or no high-quality items. B. if there are high-quality goods in the market, there will be fewer or no low-quality items. C. the more low-quality goods there are in the market, the more high-quality goods there will be in the market. D. if buyers are pessimistic about the percentage of low-quality goods on the market, sellers of low-quality goods will be able to charge higher prices than if buyers had neutral beliefs.
A tax levied on purchases of a particular good or service
A. always leads to an increase in total tax revenues. B. always leads to a reduction in total tax revenues. C. is illegal because it is discriminatory. D. is an excise tax.