Suppose that the central bank is required to follow a monetary policy rule to stabilize prices. If the economy starts at long-run equilibrium and then aggregate supply shifts right, the central bank would have to
a. increase the money supply, which causes output to move closer to its long-run equilibrium.
b. increase the money supply, which causes output to move farther from long-run equilibrium.
c. decrease the money supply, which causes output to move closer to its long-run equilibrium.
d. decrease the money supply, which causes output to move farther from long-run equilibrium.
b
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When the price of tacos rises 4 percent, the quantity demanded decreases 10 percent. What is the price elasticity of demand for tacos?
A) 40.0 B) 25.0 C) 0.4 D) 2.5 E) 10.0
A shortage creates a situation that forces prices to ________ while a surplus creates a situation that forces prices to ________
A) decrease; increase B) decrease; decrease C) increase; decrease D) increase; increase
The decrease in the value of the dollar relative to the Mexican peso
A. increased the dollar price paid and decreased the peso price received for Mexican goods imported into the U.S. B. decreased both the dollar price paid and the peso price received for Mexican goods imported into the U.S. C. increased both the dollar price paid and the peso price received for Mexican goods imported into the U.S. D. decreased the dollar price paid and increased the peso price received for Mexican goods imported into the U.S.
The theory of consumer choice is based on the hypothesis that each consumer wants to
a. maximize her total utility. b. maximize her marginal utility. c. minimize the rate at which her marginal utility diminishes. d. minimize the percentage of her consumption diverted to inferior goods.