Figure 4.4 illustrates the supply of tacos. A decrease in the supply of tacos is represented by a movement from:
A. point a to point b.
B. point c to point b.
C. S2 to S1.
D. S0 to S1.
Answer: C
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When a commercial bank lends $1000 to a customer
A) M1 and M2 decline by $1000. B) M1 and M2 rise by $1000. C) M1 rises but M2 does not change. D) there is no change in M1 or M2 until the loan proceeds are spent.
One problem with unrestricted global capital movements is that capital suppliers may
a. have little information about conditions overseas b. react quickly to bad news regardless of economic fundamentals c. be interested in short-run gains rather than development objectives d. all of the above
Funding a Missile Program Merowak Missiles is proposing to develop its next generation Democratizer Offensive Weapon System II (DOWS II) for the US military. It expects to have to sink $1 billion into R&D and design, spend $0.5 billion building the
tools and production facility that are unique to DOWS II production. It houses these in standard factory floor space that costs $1 million. Each missile has a marginal cost of $2,000 . The Pentagon is considering ordering 1 million of these missiles. What is the average cost per missile that Merowak could bid for the contract?
Based on the table showing a summary of fiscal tools, if the government increases taxes, it is most likely trying to ______.
a. fight inflation
b. utilize expansionary policy
c. boost aggregate demand
d. fight unemployment