Suppose that tacos and pizza are substitutes, and that soda and pizza are complements. We would expect an increase in the price of pizza to:
A. reduce the demand for tacos and increase the demand for soda.
B. reduce the demand for soda and increase the demand for tacos.
C. increase the demand for both soda and tacos.
D. reduce the demand for both soda and tacos.
Answer: B
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A) people requiring retraining B) welfare benefits C) people attending colleges D) employment
In a system of flexible exchange rates, expansionary monetary policy abroad would induce
a. a rise in the U.S. exchange rate. b. a fall in the U.S. rate of exchange. c. a balance of payments surplus for the United States. d. no change in U.S. exchange rates.
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If the FOMC orders a purchase of government securities from member banks, where does the FOMC get the money to pay for the securities?
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