Which price ceiling will cause the greatest excess demand?
A. $1
B. $2
C. $3
D. $4
Answer: A
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A contractionary monetary policy causes
A) higher interest rates, which increases the foreign demand for U.S. financial instruments, which causes interest rates to decrease. There is no effect on net exports. B) higher interest rates, which decreases the foreign demand for U.S. financial instruments, raising the international price of the dollar and increasing net exports. C) higher interest rates, which increases the international price of the dollar and decreases net exports. D) lower interest rates, which decreases the foreign demand for U.S. financial instruments, raising the international price of the dollar and increasing net exports.
When the ratio of domestic prices to foreign prices falls:
A) the real exchange rate depreciates only when the nominal exchange rate depreciates. B) the real exchange rate depreciates even when the nominal exchange rate is constant. C) the real exchange rate appreciates. D) the real exchange rate depreciates only when the nominal exchange rate appreciates.
The difference between GDP and net taxes is
A) actual investment spending. B) personal income. C) unplanned investment spending. D) disposable income.
Costs that require a firm to spend money are considered:
A. explicit costs. B. fixed costs. C. implicit costs. D. variable costs.