Which of the following statements is true?
A) An excess supply of credit exerts an upward pressure on the real rate of interest.
B) An excess demand for credit exerts an upward pressure on the real rate of interest.
C) At rates of interest below the equilibrium rate, there is an excess supply of credit.
D) At rates of interest above the equilibrium rate, there is an excess demand for credit.
Answer: B) An excess demand for credit exerts an upward pressure on the real rate of interest.
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Because of the existence of comparative advantage, the total output of goods is higher when each producer
A) produces many different goods. B) produces at the midpoint of its PPF. C) specializes in the production of one good or a few goods. D) makes both intermediate and final goods.
Demand-side inflation is normally accompanied by
a. falling real GDP, while supply-side inflation may be accompanied by rising real GDP. b. falling real GDP; the same is true of supply-side inflation. c. rising real GDP, while supply-side inflation may be accompanied by falling real GDP. d. rising real GDP; the same is true of supply-side inflation.
Suppose Bianca buys a used a textbook from Sebastian for $55. If Bianca's surplus from this transaction was $10, we can infer that:
A. Bianca's reservation price was $45. B. Sebastian's reservation price was $45. C. Bianca's reservation price was $60, and Sebastian's reservation price was $50. D. Bianca's reservation price was $65.
One way for governments to try and minimize the effects of structural unemployment is to:
A. subsidize retraining programs. B. mandate employers cannot fire anyone. C. increase unemployment benefits. D. All of these are ways that would minimize the effects of structural unemployment.