Refer to the information provided in Figure 12.4 below to answer the question(s) that follow.
Figure 12.4There are two sectors in the economy, X and Y, and both are in long-run, zero-profit equilibrium at the intersections of S0 and D0.Refer to Figure 12.4. Assume consumer preference changes toward X and away from Y. Ceteris paribus, sector X will likely see ________ and sector Y will likely see ________.
A. no entry or exit of firms; the exit of existing firms
B. the entrance of new firms; the exit of existing firms
C. the exit of existing firms; the entrance of new firms
D. the entrance of new firms; no entry or exit of firms
Answer: B
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General Motors Corporation (a U.S.-based firm) produces a Saab vehicle in Sweden, and sells it in the United States. In which country's GDP is it included?
a. Sweden and the United States b. The United States because it was sold there c. The United States because GM is a U.S. company d. Sweden because it was produced there
One thing the Fed has learned over the past twenty-five years is:
A. the money multiplier has a trend rate of growth that is fairly constant. B. it should focus its attention on targeting M2. C. the money multiplier is fairly constant no matter what changes are made to the monetary base. D. the money multiplier is unstable over time.
The steeply upward sloping yield curve in the figure above indicates that
A) short-term interest rates are expected to rise in the future. B) short-term interest rates are expected to fall moderately in the future. C) short-term interest rates are expected to fall sharply in the future. D) short-term interest rates are expected to remain unchanged in the future.
If there are economies of scale in the transactions demand for money, as income increases, money demand
A) increases proportionately. B) increases less than proportionately. C) increases more than proportionately. D) does not change.