If two goods are substitutes, then
a. an increase in the demand for one of them will lead to an increase in demand for the other
b. an increase in the demand for one of them will lead to a decrease in demand for the other
c. an increase in the supply of one of them will lead to an increase in supply of the other
d. an increase in the supply of one of them will lead to a decrease in supply for the other
e. they cannot be produced at the same time
A
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You notice that when the inflation rate increases, the interest rate tends to increase. This observation indicates that
A) there might be false causality between inflation and the interest rate. B) higher inflation rates must cause a higher interest rate. C) a scatter diagram of the inflation rate and the interest rate will show a positive relationshi
Which of the following would NOT cause the demand curve for bonds to shift?
A) a change in wealth B) a change in the price of bonds C) a change in the liquidity of bonds D) a change in expected inflation
Changes in nominal GDP always reflect changes in real output
a. True b. False Indicate whether the statement is true or false
Suppose the price of one euro is fixed at $1.00. A Dutch oil company discovers new oil reserves in the North Sea and offers the oil for sale. What is the impact on the foreign exchange market?
a. The dollar price of euros decreases from $1.50 to $1.00.
b. Decreasing demand for European goods shifts D2 to D1.
c. U.S. consumers demand more European goods shifting D1 to D2.
d. The quantity of euros demanded changes from Q2 to Q1.