A price-taker faces a demand curve that is:
A. vertical at the market price.
B. upward sloping.
C. horizontal at the market price.
D. downward sloping.
Answer: C
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Suppose you cash in a Certificate of Deposit (a small time deposit) to acquire the traveler's checks you'll need for your vacation. What happens to M1 and M2?
A) M1 and M2 both increase. B) M1 stays the same and M2 increases. C) M1 increases and M2 decreases. D) M1 increases and M2 stays the same.
If the MPC is 0.75, what is the value of the government purchases multiplier?
a. -1.33 b. 3.0 c. -3.0 d. 4.0 e. -4.0
The one thing that all economic models have in common is the
a. emphasis on macroeconomics b. attempt to explain market prices c. analysis of what ought to be d. use of abstraction e. ability to describe economic realities exactly
The market interest rate in Alpha is 7 percent, and the market interest rate in Beta is 10 percent; the inflation rate in Alpha is 3 percent, and inflation rate in Beta is 8 percent. Which of the following statements is true?
A. The real interest rate is higher in Alpha, but the nominal interest rate is higher in Beta. B. The real interest rate is higher in Beta, but the nominal interest rate is higher in Alpha. C. Both the real and nominal interest rates are higher in Beta. D. Both the real and nominal interest rates are higher in Alpha.