Which monetary policy tool is considered an expansionary tool?
(A) Decreasing the discount rate.
(B) Cutting taxes.
(C) Increasing the reserve requirements.
(D) Increasing government spending.
Ans: (A) Decreasing the discount rate.
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A business incurs the following costs per unit: Labor - $5/unit; Materials $3/unit and rent - $5000/month. If the firm produces 100 . units a month, the total fixed costs equals
a. $5,000 b. $8,000 c. $13,000 d. $3,000
Some studies find that trade in the Eurozone has risen substantially, but compared with the control group of nations that stayed out, Baldwin finds the effect is:
A) larger (25%) because prices have fallen and trade has increased by much more than the control group. B) just about the same because the control group is very similar to nations in the Eurozone. C) somewhat larger (9%) because there has been no measurable price decline within the union or evidence of trade diversion. D) much smaller (-2%) because trade within the union has been lackluster, whereas trade with the control group has increased dramatically.
A price increase causes a consumer's "real" income to:
A. increase. B. remain unchanged. C. decrease. D. decrease or increase depending on the size of the price change.
Suppose that total expenditures for coffee reach a maximum at a price of $5 per pound. At this price, the demand for coffee is:
A. elastic. B. inelastic. C. perfectly inelastic. D. unit elastic.