Describe what will happen to an economy in which the money supply consists of gold coins when a major new source of cheap gold is discovered
An inflationary effect occurs. The increased supply makes gold lose value relative to other goods, thus
driving up the prices (in terms of gold coins) of all goods. Another way to explain this phenomenon is that
the prices of goods are bid up due to the increase in gold. More individuals have more to spend on the same
quantity of goods.
You might also like to view...
If the price elasticity of demand for razors is 0.32, the demand for razors is
A) elastic. B) unit elastic. C) inelastic. D) perfectly inelastic. E) perfectly elastic.
In 2008, Precision Pattern Interiors, which makes high-end aircraft interiors, began a $1 million renovation of a building at the Hutchinson Air Base Industrial Tract south of Yoder, Kansas
The company will also add some $400,000 in new equipment and triple its Yoder work force. Which of Precision Pattern Interiors' decisions is a short run decision? A) triple its Yoder work force B) $1 million renovation of a building at the Hutchinson Air Base Industrial Tract C) $400,000 in new equipment purchases D) All of these decisions are short run decisions.
Paul Bergen and Virginia Clancy each own a 100-acre soybean farm in Soyburg, Illinois. Together they grow 1/1000th of 1 percent of the nation's soybeans. When they merge, it will:
a. b and e. b. be a horizontal merger. c. reduce competition in the soy market. d. increase the market power of Paul and Virginia. e. probably go unnoticed outside of Soyburg.
The demand curve facing a monopolist is
A) downward sloping. B) upward sloping. C) horizontal. D) vertical.