The money supply falls from $900 billion to $850 billion. According to the simple quantity theory of money, the price level will ___________ by __________ percent.
A. rise; 5.6
B. fall; 5.6
C. rise; 6.2
D. fall; 6.2
Answer: B. fall; 5.6
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Use the following graph, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product, to answer the next question.
With a Pt?Pc per-unit tariff, the quantities sold by foreign and domestic producers respectively will be
A. y?w and w. B. z?x and x. C. x?v and x. D. z?w and x.
When production efficiency does NOT occur,
i. an economy is producing at a point within its PPF. ii. there are unemployed resources. iii. allocative efficiency cannot occur. A) i only B) i and ii C) iii only D) i and iii E) i, ii, and iii
If the farmer is producing 5000 bushels of soybeans at point B in the figure above, we know that
A) the farmer is not using his resources efficiently. B) the farmer is using his land to produce a crop other than soybeans or corn. C) the farmer must be using more land than was used in constructing the production possibilities curve. D) the farmer is using his resources efficiently.
Explain how the "invisible hand" makes sure that markets reach equilibrium more quickly than they would if the government sets prices for goods.
What will be an ideal response?