In the money market, an excess supply of money will:
A) increase the demand for bonds, increase bond prices, and decrease interest rates.
B) increase the demand for bonds, decrease bond prices, and decrease interest rates.
C) decrease the demand for bonds, increase bonds prices, and increase interest rates.
D) decrease the demand for bonds, decrease bond prices, and increase interest rates.
A
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Refer to Figure 18-1. Suppose that the U.S. government deficit decreases, causing interest rates in the United States to fall relative to those in the European Union. Assuming all else remains constant, how would this be represented?
A) Supply would increase, demand would increase and the economy moves from D to A to B. B) Supply would decrease, demand would increase and the economy moves from A to D to C. C) Demand would increase and the economy moves from A to B. D) Demand would decrease and the economy moves from B to A.
The application of game theory to economics allows us to understand firm behavior in some forms of oligopoly. Game theory suggests that in a two-firm industry, each firm will
a. avoid pricing high when the other prices low b. select high prices and defend that selection because, in the long run, their profits are higher than if they competed by lowering prices c. end up mistaking the other's intentions, which results in low prices and low profit for both in the long run d. end up colluding with the other to form a cartel e. agree with the other not to allow other firms to enter the industry
A monopoly is MOST likely to be temporary if the monopoly power is derived from:
A) high barriers to entry. B) a lack of substitutes for the monopolist's product. C) economies of scale. D) technological change.
Effective minimum-wage laws will most likely
a. increase demand for labor. b. create a surplus of labor. c. increase incomes for all unskilled workers. d. decrease incomes for all unskilled workers.