Which of the following effects best explains the downward slope of the aggregate demand curve?
A. An expectations effect
B. A multiplier effect
C. A substitution effect
D. An interest-rate effect
Answer: D
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Banks in Richland charge an interest rate of 4% for overnight loans to each other. How will this rate change if the central bank of Richland engages in open market operations to purchase bonds?
What will be an ideal response?
The above figure shows a graph of the market for pizzas in a large town. No pizzas will be demanded unless price is less than
A) $0. B) $5. C) $12. D) $14.
If the cost of production incurred by two producers in a competitive industry differs, the long-run supply curve:
a. will be a downward sloping step function. b. will be an upward rising step function. c. will be a horizontal line at the market price. d. will be a vertical line at the equilibrium output.
The change in the cost of living over time is referred to as:
A. inflation. B. substitution bias. C. a fixed-weight price index. D. real income.