In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are:
A. complementary goods and the higher price for oil increased the demand for natural gas.
B. substitute goods and the higher price for oil increased the demand for natural gas.
C. complementary goods and the higher price for oil decreased the supply of natural gas.
D. substitute goods and the higher price for oil decreased the supply of natural gas.
Answer: B
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This chapter stressed the importance of using appropriate samples for empirical studies. Consider the following two problems in that light
a. You are given a class assignment to find out if people's political leanings affect the newspaper or magazine that they read. You survey two students taking a political science class and five people at a coffee shop. Almost all the people you have spoken to tell you that their political affiliations do not affect what they read. Based on the results of your study, you conclude that there is no relationship between political inclinations and the choice of a newspaper. Is this a valid conclusion? Why or why not? b. Your uncle tells you that the newspaper or magazine that people buy will depend on their age. He says that he believes this because, at home, his wife and his teenage kids read different papers. Do you think his conclusion is justified?
Refer to Figure 7-2. At the market equilibrium, the deadweight loss is equal to
A) $0. B) $500,000. C) $1,000,000. D) $2,000,000.
Which of the following will increase the total amount of reserves banks are holding?
A. A bank increases the number of loans to firms and households. B. A bank borrows reserves from the Federal Reserve. C. A bank attracts new customers depositing funds into their checkable deposits. D. The Federal Reserve reduces the reserve requirement.
If depositors become worried about the safety of their deposit accounts, they may trigger a
a. deposit surplus. b. bank run. c. fiscal policy crisis. d. required reserve increase.