You have just read that Australia has suffered a drought, destroying its wheat crop for this year. The effect of this adverse supply shock on Australia would probably be
A) an increase in prices and an increase in real interest rates.
B) an increase in prices, an increase in nominal interest rates, but a decrease in real interest rates.
C) a decrease in prices and a decrease in real interest rates.
D) a decrease in prices, a decrease in nominal interest rates, but an increase in real interest rates.
A
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In the case of the Ford Pinto, Ford decided that
A) it would be cheaper to pay damages to families involved in crashes than to fix the problems with the Pinto. B) it would be more expensive to pay damages to families involved in crashes than to fix the problems with the Pinto. C) the problems with the Pinto could not be easily or cheaply fixed. D) it would not be held liable for damages caused by the Pinto and therefore had no reason to fix them.
When the colonies obtained independence they were no longer bound by a number of English laws, including the Navigation Acts which restricted and regulated trade. What best describes the impact of the removal of the Navigation Acts for commodities that were imported from England? a. A shift out of the supply curve and a shift back in the demand curve, which lowered prices
b. A shift out in the supply curve, which decreased the price and increased the quantity. c. A shift back in both the supply and demand curves, which decreased quantity. d. A shift back in the demand curve, which lowered both price and quantity.
If we are going to get the most value from our resources, entrepreneurs should choose the investment alternatives that
a. yield a profitable rate of return. b. are most heavily subsidized by the government. c. result in the production of the largest possible output regardless of value to consumers. d. reduce the value of resources and retard wealth accumulation.
If Jerry's demand for leisure increases as the wage increases:
A. the income effect dominates the substitution effect. B. the substitution effect dominates the income effect. C. the income effect is completely offset by the substitution effect. D. there is insufficient information.