In terms of the price-real GDP diagram, a given expansion of the money supply will have a greater effect on prices the
A. steeper the aggregate supply curve.
B. flatter the aggregate supply curve.
C. higher the initial price level.
D. lower the initial price level.
Answer: A
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The term “satisficing” indicates an optimal choice.
Answer the following statement true (T) or false (F)
When demand is perfectly inelastic, the demand curve will be
a. negatively sloped, because buyers decrease their purchases when the price rises. b. vertical, because buyers purchase the same amount as before whenever the price rises or falls. c. positively sloped, because buyers increase their purchases when price rises. d. positively sloped, because buyers increase their total expenditures when price rises.
Consider Firm X belongs to Country A and Firm Y belongs to Country B. Suppose it's technologically feasible for both firms to produce Good Z. Also, assume that if they do, then they will be the only suppliers of Good Z in the world. Now, both firms have to decide simultaneously whether to produce Good Z or not. Figure (a) shows the payoffs for both firms if their respective governments do not provide them with export subsidies. Figure (b) shows the payoffs when the government of Country B grants an export subsidy to Firm Y, but the government of Country A does not grant an export subsidy to Firm X. From Figure (b), the decision of Country B's government to subsidize Firm Y
height="226" width="466" /> A. can never lead to an optimal solution since Firm X will surely produce. B. will be good for Country B only if the government of Country A decides to subsidize Firm X. C. will be suboptimal since it will lose its customers in Country A. D. can be good for Country B because Firm X will decide not to produce.
A manufacturing company designs and produces an incredibly efficient solar heating system for large buildings and earns very large profits on it. Which of the following is true?
A. The profits this firm earns aren't deserved, as the firm did not take any risks. B. The profits this firm earns are a return for an innovation. C. This firm must not be in a competitive market if it was able to earn a profit. D. both A and C