If a competitive market operates perfectly, it relies on:
A. the number of people buying goods.
B. the laws of supply and demand.
C. how many products can be produced for sale.
D. how much people are willing to pay for the products.
Answer: B
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All else equal, an increase in government borrowing is likely to cause a(n):
A) leftward shift of the credit demand curve. B) rightward shift of the credit demand curve. C) downward movement along the credit demand curve. D) upward movement along the credit demand curve.
An increase in shipments of currency from the Federal Reserve to commercial banks will
A) increase the money supply. B) increase bank reserves. C) reduce bank reserves. D) have no effect on bank reserves.
People derive utility in their lives from consuming goods (all other goods), g, and clean air (measured as the number of particulates removed per m3), a, as measured with the utility function U(g,a) = g0.6a0.4
The price index of consumer goods equals $20 per day. Income equals $1000. What is likely to happen to the number of asthma cases as the price of clean air (abatement cost) increases from $10 to $20? A) Asthma cases decrease because the particulants per m3 increases by 2 units. B) Asthma cases increase because the particulant per m3 decreases by 2 units. C) Asthma cases increase because the particulants per m3 increase by 2 units. D) There is not enough information to answer this question.
Fiscal policy refers to the:
A. deliberate changes in government spending and taxes to stabilize domestic output, employment, and the price level. B. deliberate changes in government spending and taxes to achieve greater equality in the distribution of income. C. altering of the interest rate to change aggregate demand. D. fact that equal increases in government spending and taxation will be contractionary.