For a Giffen good, the income effect is:
a. less than the substitution effect
b. greater than the substitution effect
c. in the same direction as the substitution effect
d. exactly offset by an equal substitution effect
e. none of the above
Ans: b. greater than the substitution effect
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Which of the following is included in U.S. GDP?
i. the rental value of homes owned by U.S. citizens ii. the production of Suburban SUVs by GM in its plant in Mexico iii. tickets sold by U2 for concerts held in the United States A) i only B) ii only C) ii and iii D) i, ii and iii E) i and iii
Suppose we were analyzing the pound per Swiss franc foreign exchange market. If Switzerland's interest rate rises relative to England and nothing else changes, then the:
a. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market rises, causing an appreciation of the Swiss franc. b. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market falls, causing an uncertain change in the value of the Swiss franc. c. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing a depreciation of the Swiss franc. d. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate. e. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing an appreciation of the Swiss franc.
Other things being equal, the quantity of money that people wish to hold can be expected to:
a. None of the answers are correct. b. increase as the interest rate increases. c. decrease as real GDP increases. d. decrease as the interest rate increases.
If when the money supply changes, real output and velocity do not change, then a 2 percent increase in the money supply
a. decreases the price level by 2 percent. b. decreases the price level by less than 2 percent. c. increases the price level by less than 2 percent. d. increases the price level by 2 percent.