Assume that the Cambridge k = 0.25. If the transactions demand for money is equal to $20,000, then income is equal to
A) $20,000.
B) $80,000.
C) $10,000.
D) $5,000.
D
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What effect would a reduction in the U.S. selling price of Japanese-made cars have on the U.S. demand for American-made cars?
A) No effect, because price changes affect quantity demanded, not demand. B) The demand would decrease. C) The demand would increase. D) We cannot tell unless we know the elasticities of demand for Japanese-made and American-made cars. E) We cannot tell unless we know what happened to the price of American-made cars.
According to the book, Akio Morita (the founder of Sony) drew a long-run average cost curve that was
A) U-shaped. B) V-shaped. C) W-shaped. D) horizontal
Figure 11-3
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In Figure 11-3, if person 1 and person 2 have the indicated quantities of cheese and crackers and are on the indicated indifference curves, is there the possibility of mutually beneficial trade? Explain.
What will be an ideal response?
According to the classical model, if there are too many elementary school teachers in the labor market,
a. the government should institute a retraining program to give the unemployed teachers new job skills b. the wages for elementary teachers will fall, eventually causing the number of excess teachers to shrink c. the wage for elementary teachers will increase for those who are employed, but unemployment of teachers will remain high d. this situation provides an example of cyclical unemployment, which often occurs in the long run e. people will quit training to become elementary school teachers and soon there will be a shortage in this labor market