When the money market is drawn with the value of money on the vertical axis, if the price level is below the equilibrium level, there is an
a. excess demand for money, so the price level will rise.
b. excess demand for money, so the price level will fall.
c. excess supply of money, so the price level will rise.
d. excess supply of money, so the price level will fall.
c
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Suppose that the government is considering a policy to combat unemployment. If the government pays for increased spending by borrowing funds that otherwise would have been used for consumption and investment,
a. the positive effect of increased government spending is augmented by an increase in private spending. b. the negative effect of increased government spending is offset by an increase in private spending. c. the negative effect of increased government spending is augmented by a reduction in private spending. d. the positive effect of increased government spending is offset by a reduction in private spending.
Say's Law
a. is valid only in a simple economy without financial markets b. led economists during the 1920s to encourage the government to adopt flawed economic policies that led to the Great Depression c. assures us that in the aggregate, firms are able to sell their output so that full employment can be sustained d. tells us that in the long run, markets clear e. tell us that firms must carefully monitor consumer spending and saving in order not to produce more than consumers are willing to purchase
If Mexico's GDP drops, which of the following will happen in the market for pesos?
a. A rightward shift of the supply curve, a depreciation of the peso, and a larger number of pesos traded b. A rightward shift of the demand curve, a depreciation of the peso, and a smaller number of pesos traded c. A rightward shift of the demand curve, an appreciation of the peso, and a larger number of pesos traded d. A leftward shift of the demand curve, a depreciation of the peso, and a smaller number of pesos traded e. A leftward shift of the supply curve, an appreciation of the peso, and a smaller number of pesos traded.
Natural monopolies are most likely to arise when firms have:
A. low start-up costs and low marginal costs. B. high start-up costs and high marginal costs. C. low start-up costs and high marginal costs. D. high start-up costs and low marginal costs.