According to the quantity theory of money, if the economy were facing inflation, the Federal Reserve Bank could combat it by:
A. decreasing the supply of money.
B. increasing the supply of money.
C. cutting taxes.
D. increasing taxes.
A. decreasing the supply of money.
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Mobil Energy Corp has a monopoly on gas sales in Texas. If the price of oil increases, the price of gas will
a. increase. b. decrease. c. remains the same. d. may increase or decrease.
For identical cost conditions, the long-run equilibrium price under any form of imperfect competition is ____ than the long-run equilibrium price in perfect competition because of ____.
a. higher; perfectly elastic demand in imperfect competition. b. higher; less than perfectly elastic demand in imperfect competition. c. lower; perfectly elastic demand in imperfect competition. d. lower; less than perfectly elastic demand in imperfect competition.
Suppose that in Germany, the opportunity cost of producing a gallon of beer is 5 gallons of wine. In Italy, the opportunity cost of producing a gallon of beer is 3 gallons of wine
a. What is the opportunity cost of producing a gallon of wine for Germany? b. What is the opportunity cost of producing a gallon of wine for Italy? c. Which country has a comparative advantage in the production of beer? d. Which country has a comparative advantage in the production of wine?
Answer the following statement(s) true (T) or false (F)
1. If a model is based on unrealistic assumptions, then it cannot be robust. 2. Equilibrium conditions are used to analyze the desirability of economic outcomes. 3. A Nash equilibrium is one in which each individual optimizes taking market prices as given. 4. Efficiency is one common criterion that economists use to judge whether or not an outcome is desirable. 5. Even if an economic model is not detailed enough to give numerical predictions, it might still be useful if it can indicate the direction of change in economic variables.