Assume the central bank decides to raise the discount rate. Where and how should you begin your analysis when analyzing the chain reaction of economic interactions?
a. Start the analysis in the real goods market with aggregate demand shifting to the right.
b. Start the analysis in the real credit market with demand for real credit shifting to the left.
c. Start the analysis in the real credit market with demand for real credit shifting to the right.
d. Start the analysis in the real credit market with supply of real credit shifting to the left.
e. Start the analysis in the real credit market with supply of real credit shifting to the right.
.D
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Joe's indifference map for lobster and soda is shown in the above figure along with his budget line. Will Joe choose point a? Explain your answer in terms both of MRS and the level of utility
What will be an ideal response?
Suppose the government has granted patents to three firms that make the only versions of a particular type of product. What will result?
a. The small number of competitors will attract new firms to the market. b. Monopolistic competition will drive at least one firm to exit the market. c. The three firms will constitute an oligopoly. d. The three firms will have a legal monopoly rather than a natural monopoly.
When the government sets a price floor which is below the equilibrium price
A. the equilibrium price will be maintained. B. a surplus will develop. C. a price ceiling will follow. D. a shortage will develop.
Refer to the scenario above. If Joseph prefers fairness to money, ________
A) he will not accept any offer made by Phillip B) he will always accept any offer made to him C) he will accept the offer if offered an equal share of the money D) Phillip will offer the minimum amount of money to Joseph