Suppose there are two individuals with identical demand curves characterized by the equation P = 2 - Q. What is market demand if these demand curves are added horizontally? Vertically?
What will be an ideal response?
Horizontal adding yields Q = 4 - 2P. Vertical adding yields Q = 2 - 1/2P.
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In the classical model, what occurs if a wage of $20/hour results in unemployed workers?
A) The wage rate will drop, more workers will be hired, and the unemployment rate falls. B) Producers will quickly create more jobs and hire the unemployed workers, so unemployment is short-lived. C) The workers will go on strike to demand that more jobs be created. D) The government will step in and order firms to hire more workers.
Examples of discount bonds include
A) U.S. Treasury bills. B) corporate bonds. C) U.S. Treasury notes. D) municipal bonds.
In the ISLM framework, monetary policy has the greatest impact on equilibrium income when
A) money demand = money supply. B) money demand is infinitely elastic. C) the interest rate is low. D) the investment function is highly interest-sensitive.
Buying securities on the margin requires people interested in buying stocks to pay only a percentage (a margin) of the actual purchase price. The rest is borrowed from someone else, usually an investor's broker
Indicate whether the statement is true or false