Exhibit 16-6 Money, investment and product markets
In Exhibit 16-6, if the interest rate falls from i1 to i2, then:
A. the quantity demanded of investment increases from I1 to I2 and investment spending shifts the aggregate demand curve from AD2 to AD1, decreasing the level of real GDP.
B. the quantity demanded of investment increases from I1 to I2 and investment spending shifts the aggregate demand curve from AD1 to AD2, increasing the level of real GDP.
C. the quantity demanded of investment decreases from I2 to I1 and investment spending shifts the aggregate demand curve from AD1 to AD2, decreasing the level of real GDP.
D. the quantity demanded of investment decreases from I2 to I1 and investment spending shifts the aggregate demand curve from AD2 to AD1, increasing the level of real GDP.
Answer: B
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Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound. Robinson's marginal utility is 30 for the last pound of mangos purchased and 10 for the last pound of bananas
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Movie theaters are able to offer discounts to senior citizens because:
a. the elderly deserve lower prices because of their contributions to society. b. senior citizens have the most inelastic demand. c. theaters can separate senior citizens from other customers, and it is easier to prevent resale. d. senior citizens cannot see the movie very well because of poor eyesight. e. senior citizens are frequent visitors to the movie theaters.
Which of the following is the most correct statement about the relationship between inflation and unemployment?
a. In the short run, falling inflation is associated with falling unemployment. b. In the short run, falling inflation is associated with rising unemployment. c. In the long run, falling inflation is associated with falling unemployment. d. In the long run, falling inflation is associated with rising unemployment.
Which statement is false?
A. Under the United States' economic system, most of the important decisions are made in the market place. B. In the United States' economy the price mechanism determines the answers to the United States' three basic questions-what, how, and for whom. C. Most economists would agree that the price system leads to a very efficient allocation of resources. D. None of these statements are false.