Assume there is a simultaneous decrease in the cost of batteries used in hybrid cars and a shift in consumer preferences toward more fuel-efficient vehicles. Based on this, we can conclude, with certainty, that in the market for hybrid cars, equilibrium: A) price will decrease. B) price will increase. C) quantity will decrease. D) quantity […]
An increase in stock prices ________ the size of people’s wealth and may ________ their willingness to spend, everything else held constant. A) increases; increase B) increases; decrease C) decreases; increase D) decreases; decrease ANSWER A
The slope of the linear consumption function represents autonomous consumption expenditures. Indicate whether the statement is true or false ANSWER FALSE
In the foreign exchange market, foreign residents wishing to purchase U.S. exports or U.S. real and financial assets must: A) demand U.S. dollars by supplying their foreign currency. B) demand U.S. dollars by supplying U.S. dollars. C) supply U.S. dollars by demanding their foreign currency. D) none of the above. ANSWER A
Explain the difference between a cartel and tacit collusion. Is tacit collusion illegal in the United States? Explain. What will be an ideal response? ANSWER A cartel consists of a formal agreement among firms to coordinate their production and pricing decisions so as to maximize the joint profits of the cartel members. Cartels are […]
When stock prices fall A) an individual’s wealth is not affected nor is their willingness to spend. B) a business firm will be more likely to sell stock to finance investment spending. C) an individual’s wealth may decrease but their willingness to spend is not affected. D) an individual’s wealth may decrease and their willingness […]
The stock market is A) where interest rates are determined. B) the most widely followed financial market in the United States. C) where foreign exchange rates are determined. D) the market where most borrowers get their funds. ANSWER B
Lending abroad represents: A) a capital outflow. B) a capital inflow. C) positive net savings. D) none of the above. ANSWER A
An isoquant identifies all of the combinations of two inputs that result in the same total costs of production. Indicate whether the statement is true or false ANSWER FALSE
Illustrate graphically the effect the credit market crisis in the United States in 2008 had in the market for existing single-family homes. Assuming the demand for existing single-family homes is relatively inelastic, what is likely to happen to the total revenues of home sellers as a result of the credit market crisis? ANSWER The […]
