Figure 4.3 illustrates the demand for tacos. Assume that tacos and beer are complements. A decrease in the price of beer would bring about a movement from
A) point a to point c. B) point c to point a. C) D2 to D0. D) D0 to D2.
D
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
If, at the current exchange rate between the dollar and the South African rand of 6.92 rand per dollar, the rand is "undervalued," how do you expect demand and supply in the foreign exchange markets to respond?
A) The supply of the dollar will rise, while the demand for the rand will fall. B) The supply of the dollar will rise, while the demand for the rand will rise. C) The demand for the dollar will rise, while the supply of the rand will fall. D) The demand for the dollar will fall, while the supply of the rand will rise.
With the exception of during recessions, workers in Canada are eligible for unemployment benefits for about twice as long a period of time as workers in the United States. As a result
A) the unemployment rate in Canada is usually higher than in the United States. B) the opportunity cost of job search in Canada is lower than in the United States. C) frictional unemployment is higher, on average, in the United States than in Canada. D) the average duration of unemployment is longer in the United States than in Canada.
Price and quantity in Bertrand and Cournot models
A) are the same. B) are different. C) might be the same depending on whether the products are identical or differentiated. D) are the same as in a duopoly.