Which of the following best describes the influence of successful advertising on the market for aspirin?
A) The market demand curve shifts to the right, creating a shortage at the original equilibrium price.
B) Individuals' demand curves shift to the right, but the market demand curve remains at its original position.
C) The market supply curve shifts to the right, creating a surplus at the original equilibrium price.
D) The market supply curve for aspirin shifts to the right, causing equilibrium price to decrease.
A
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As the purchasing power of wealth increases, saving decreases
Indicate whether the statement is true or false
Refer to Figure 22.2 below. Suppose that the supply of land is constant at L acres, and Price per acre is $400. In addition, the before-tax demand for land can be characterized by the equation P = 500 - 2L, where L is the acres of land and P is the price.
(A) What is the constant supply of land (L) in the market?
(B) If the after-tax demand curve, P , can be written as P = 400 - 4L, what is P , and how
much tax revenue is generated?
On the graph above, suppose the economy has moved from point H to point G. If the shock was temporary and inflation expectations are adaptive, the economy will next ________
A) return to point H B) move to point F C) move to a point between points G and H D) remain at point G E) none of the above
Suppose the U.S. government announces that it will bring the federal budget deficit to zero, over the next ten years, with no change in tax rates
Describe the effects of such a policy according to the three business cycle models, assuming that the policy is fully credible.