Recall the Application about food and drink pricing during "happy hour" at bars and restaurants to answer the following question(s).Recall the Application. In a market subject to monopolistic competition, a restaurant's rational response to more elastic demand is to increase its price.
Answer the following statement true (T) or false (F)
False
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How does a change in the quantity of money change the interest rate in the short run?
What will be an ideal response?
The slope of the production possibilities frontier is defined to be the marginal rate of
A) transformation. B) technical substitution. C) substitution. D) profit.
An economy that is operating below its full-employment capacity is experiencing:
a. Say's Law. b. unrealizable inflationary expectations. c. Keynesian aggregate demand. d. an inflationary gap. e. a recessionary gap.
Assume that the central bank lowers the discount to increase the nation's monetary base. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and reserve-related (central bank) transactions in the context of the Three-Sector-Model? State your answer after the macroeconomic system returns to complete
equilibrium. a. The real risk-free interest rate remains the same and reserve-related (central bank) transactions become more positive (or less negative). b. The real risk-free interest rate falls and reserve-related (central bank) transactions become more negative (or less positive). c. The real risk-free interest rate falls and reserve-related (central bank) transactions remain the same. d. The real risk-free interest rate and reserve-related (central bank) transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.