Which of the following statements is true?
A) An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply.
B) A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand.
C) If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease.
D) If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater.
Answer: A
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The quantity demanded is always equal to the quantity supplied
Indicate whether the statement is true or false
According to the purchasing power parity theory, which of the following is most likely to affect exchange rates?
a. differences in inflation rates b. differences in interest rates c. differences in income levels d. differences in real GDP growth rates
The above figure shows the production possibility frontier for a country. Suppose the country is producing at point D. What is the opportunity cost of increasing the production of rice to 15 tons?
A) 9 thousand bottles of wine B) 12 tons of rice C) 6 thousand bottles of wine D) 15 thousand bottles of wine E) Nothing, it is a free lunch.
As a percentage of GDP, all of the following federal government expenditures are expected to increase from 2012 to 2042 except
A) Social Security. B) Medicare and Medicaid. C) the net interest on the federal debt. D) national defense.