The change illustrated in the figure above can be the result of the Fed ________ government securities in the open market and will ultimately lead to ________ in aggregate demand
A) selling; an increase
B) selling; no change
C) buying; no change
D) buying; an increase
E) selling; a decrease
D
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Suppose the equilibrium price of cotton is $100 per ton. A price support set at ________ than $100 per ton ________
A) less; increases producer surplus B) less; increases consumer surplus C) more; increases consumer surplus D) more; decreases marginal cost E) more; creates a surplus that the government must buy
If the demand faced by a firm is inelastic, selling one more unit of output will
a. increase revenues. b. decrease revenues. c. keep revenues constant. d. increase profits.
Given that resources can be allocated by the government, the market, a random process, or on a first-come first-serve basis, which of the following statements is true?
a. The market system is not entirely fair but it creates incentives to increase supplies and improve standards of living. b. The random process of allocation allows individuals to acquire purchasing power and enhances the value of the resources that they own. c. Since the government system does not distinguish between those who have income and those that do not, government allocation of resources is the most efficient. d. There will be no shortages under the first-come first-serve basis of allocation. e. A random process of allocation is fair in the sense that everyone gains and there are no losers.
Bob deposits $100 in a bank account that pays an annual interest rate of 5 percent. A year later, Bob withdraws his $105 . If deflation was 7 percent during the year the money was deposited, then Bob's purchasing power has increased by 12 percent
a. True b. False Indicate whether the statement is true or false