If a shortage exists in a market then:
a. the price is below equilibrium
b. the quantity demanded exceeds the quantity supplied.
c. the price will rise in the near future.
d. all of the above.
d
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If short-term government bond rates were indexed
A) such bonds would be a poor hedge against inflation. B) banks and saving and loan institutions would likely lose deposits. C) the government would gain from the implied inflation tax. D) the government would gain from the implied inflation subsidy.
Refer to Figure 10.7. A movement from point D to point C could be caused by
A) a positive demand shock. B) an increase in the term premium investors expect in the future. C) an increase in the term structure effect. D) an increase in the expected rate of inflation.
If households spend $0.95 of each additional dollar of increased income, the expenditure multiplier will be
A) 1.05. B) 5. C) 20. D) 9.5.
Kylie spends her income of $150 per week on two goods: movies (which cost $5 each) and books (which cost $10 each)
At her current level of consumption, the marginal utility from the last movie consumed is 20 and the marginal utility from the last book consumed is 30 . Is Kylie maximizing her utility? Why or why not? If not, what should Kylie do to achieve a higher level of utility?