Suppose that investment is not very responsive to interest rates, so that a sizable increase in interest rates has only a minor effect on investment. In this case, monetary policy would have:
A. a massive effect on output.
B. no effect on output.
C. a modest effect on output.
D. a substantial effect on output.
Answer: C
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Market basket B is to the northwest of basket A but lies on the same indifference curve for a consumer. Market basket C also lies to the northwest of A but is above the indifference curve. This consumer
a. prefers C to A. b. is also indifferent between A and C. c. prefers B to A. d. prefers C to B.
Human beings
A) have unlimited wants. B) think they have unlimited wants, but really have limited needs. C) have limited wants, but unlimited needs. D) know what their needs are, but do not know what their wants are.
Given that frozen yogurt and ice cream are substitutes, a shift in preferences in favor of yogurt would be predicted to do all of the following EXCEPT
A) raise the equilibrium price of frozen yogurt. B) increase the quantity supplied of frozen yogurt. C) increase the supply of ice cream. D) increase the demand for frozen yogurt.
As the price level increases, the quantity of RGDP demanded in the economy ____, and when the price level decreases, the quantity of RGDP demanded in the economy ____
a. decreases, decreases b. increases, increases c. increases, decreases d. decreases, increases