Refer to Figure 6.6, which shows a market for taxi medallions. If the number of taxi licenses is reduced from Q2 to Q1, the consumer surplus from consuming taxicab services is represented by:
A. area ABF.
B. area ACFG.
C. area DEH.
D. area BEFH.
Answer: A
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If the number of people in the labor force ________, then ________
A) increases; the labor force participation rate increases B) increases; the unemployment rate definitely increases C) decreases; the unemployment rate definitely decreases D) decreases; the labor force participation rate increases E) decreases, the unemployment rate does not change
All else the same, if a bank's liabilities are more sensitive to interest rate fluctuations than are its assets, then ________ in interest rates will ________ bank profits
A) an increase; increase B) an increase; reduce C) a decline; reduce D) a decline; not affect
The market's allocation of resources is
a. inefficient whenever the government intervenes b. efficient regardless of whether externalities exist c. efficient only when externalities exist d. inefficient whenever externalities are present e. dependent upon externalities
Which set of changes is definitely predicted to raise Real GDP in the short run?
A) Wealth increases and there is an adverse supply shock. B) Individuals expect higher (future) incomes and wage rates fall. C) Business taxes rise and wage rates fall. D) The U.S. dollar appreciates and there is a beneficial supply shock. E) none of the above