Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C
B. D; B
C. A; B
D. B; C
Answer: B
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If the supply for a good is elastic, that means that when price increases, the
A) supply will increase. B) quantity supplied will decrease. C) quantity supplied will increase by a smaller percentage than the price increased. D) quantity supplied will increase by a greater percentage than the price increased.
If the tariff on computers is not changed, but domestic computer producers shift from domestically produced semiconductors to imported components, then the effective rate of protection in the computer industry will
A) increase. B) decrease C) remain the same. D) depend on whether computers are PCs or "Supercomputers." E) no longer apply.
The most significant change in the economic environment that changed the demand for financial products in recent years has been
A) the aging of the baby-boomer generation. B) the dramatic increase in the volatility of interest rates. C) the dramatic increase in competition from foreign banks. D) the deregulation of financial institutions.
Which of the following is the result of a banking panic?
a. A decrease in the demand deposit multiplier b. An increase in the money supply c. An increase in bank reserves d. A decrease in the money supply e. An increase in the demand deposit multiplier