Two goods are substitutes when
A. an increase in the price of one reduces the demand for the other.
B. the two goods have the same price.
C. an increase in the price of one raises the demand for the other.
D. the two goods are used together.
Answer: C
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Compared to the fixed-price/fixed-wage model, in the Keynesian model with a flexible price but fixed wage, an increase in the money stock will cause output to rise by
a. less while the interest rate will fall by more. b. less and the interest rate to fall by less. c. more but the interest rate to fall by less. d. more and the interest rate to fall by more.
If there are eight firms in a market and each has an equal market share, the Herfindahl-Hirschman Index (HHI) is ________ and the market is considered to be ________.
A) 1,250; moderately competitive B) 2,800; moderately competitive C) 1,250; competitive D) 2,800; competitive
Which of the following is a true statement?
a. Unanticipated inflation is a change in the general level of prices that catches most decision makers by surprise. b. High and variable rates of inflation are easy for decision makers to forecast accurately. c. High and variable rates of inflation can increase GDP by reducing investment. d. When decision-makers are able to anticipate slow, steady rates of inflation, prices become more unstable and there is a negative impact on the level of prosperity.
Which of these events would cause the consumer price index to overstate the increase in the cost of living?
a. Car makers benefit from a new technology that allows them to sell higher-quality cars to consumers with no increase in price. b. Energy prices decrease, and consumers respond by buying more gas and electricity. c. A new good is introduced that renders cellular telephones inferior and obsolete. d. All of the above are correct.