Recall the Application about the decrease in price of illegal drugs in the United States to answer the following question(s).Recall the Application. If the decrease in price of illegal drugs is primarily due to a change in demand, the equilibrium quantity of drugs:
A. will increase.
B. will decrease.
C. will not change.
D. may or may not change.
Answer: B
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Investment spending includes spending on:
A. consumer durable goods. B. stocks and bonds. C. services. D. new capital goods.
If the marginal propensity to save (MPS) = 0.1, then
A) the MPC = 0.9. B) the APS = 0.1. C) the APC = 0.9. D) consumption equals $1,800 when income equals $2,000.
Coal and iron ore are complements in the manufacture of steel. An increase in the price of coal would lead to
A) an increase in the demand for iron ore as producers substitute more iron ore for coal in the production process. B) a decrease in the demand for iron ore as steel manufacturers reduce production of steel. C) an increase in the supply of iron ore as iron ore producers see an opportunity to expand their markets. D) no change in the demand for iron ore since the steel makers must use both iron ore and coal if they are to make steel.
Is it possible for a country's nominal GDP to increase and real GDP to decrease from one year to the next?
A. Yes, it would indicate a larger rise in prices relative to a decrease in output. B. No, since prices are held constant and that would be mathematically impossible. C. Yes, it would indicate a larger rise in output relative to a decrease in prices. D. No, since output is held constant and that would be mathematically impossible.