Econ 201 Quiz 1-4

Refer to Figure 28-4. If 12,000 workers are unemployed, then the minimum wage must be

$16

In 1986, Ken bought a Ford Mustang for $8,000. If the price index was 122 in 1986 and the price index was 280 in 2011, then what is the price of the Mustang in 2011 dollars?

$18,360.66

Nate collected Social Security payments of $220 a month in 1985. If the price index rose from 90 to 108 between 1985 and 1986, then his Social Security payments for 1986 should have been

$264

Refer to Table 6-3. Following the imposition of a price floor $2 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is

$3

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits?

$4,937.5 billion

Refer to Table 24-12. Will's 2009 food expenditures in 2010 dollars amount to

$5,250

Corey deposits $1,000 in a savings account that pays an annual interest rate of 5 percent. Over the course of a year, the inflation rate is 1.7 percent. At the end of the year, Corey has

$50 more in his account, and his purchasing power has increased by $33.

Which of the following is the correct formula for the GDP deflator?

(nominal GDP/real GDP) x 100

In the special case of the 100 percent-reserve banking, the money multiplier is

1 and banks do not create money.

Refer to Table 28-3. How many people were employed in Baltivia in 2009?

11,000

Refer to Table 24-6. If the base year is 2009, then the economy's inflation rate in 2010 is

20 percent

If the consumer price index was 96 in 2012, 100 in 2013, and 102 in 2014, then the base year must be

2014

Refer to Table 28-2. The number of adults not in the labor force of Aridia in 2010 was

400

Refer to Table 24-15. The inflation rate in 2015 was approximately

41%

If a binding price ceiling is imposed on the baby formula market, then

All of the above are correct.

If a binding price floor is imposed on the video game market, then

All of the above are correct.

Refer to Figure 5-2. As price falls from Pa to Pb, we could use the three demand curves to calculate three different values of the price elasticity of demand. Which of the three demand curves would produce the smallest elasticity?

D3

Jenna is searching for a job that suits her tastes about where to live. Mary is looking for a job that makes best use of her skills.

Jenna and Mary are both frictionally unemployed.

Refer to Figure 5-3. Which demand curve is unit elastic?

None of the above

Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for orange juice of an announcement by the American Dental Association that orange juice erodes tooth enamel?

Point C to Point B

Refer to Figure 5-19. Which of the following statements is not correct?

Supply curve C is unit elastic.

Which of the following was not a reason OPEC failed to keep the price of oil high?

The agreement OPEC members signed allowed each country to produce as much oil as each wanted.

For a particular good, a 3 percent increase in price causes a 10 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

There are many close substitutes for this good.

According to the theory of liquidity preference, an increase in the price level causes the a. interest rate to rise and investment to fall. b. interest rate and investment to rise. c. interest rate to fall and investment to rise. d. interest rate and investment to fall.

a

A linear, upward-sloping supply curve has

a constant slope and a changing price elasticity of supply.

Minimum-wage laws dictate

a minimum wage that firms may pay workers.

Aggregate demand shifts right if at a given price level a. taxes fall and shifts left if the money supply increases. b. taxes fall and shifts right if the money supply increases. c. taxes rise and shifts left if the money supply increases. d. taxes rise and shifts right if the money supply increases.

b

The long-run aggregate supply curve shifts left if a. the government removes some environmental regulations that limit production methods. b. there is a natural disaster. c. the capital stock increases. d. None of the above is correct.

b

According to the theory of liquidity preference, if output decreases a. people want to hold less money. This response is shown as a movement along the money demand curve. b. people want to hold more money. This response is shown as a movement along the money demand curve. c. people want to hold less money. This response is shown as a shift of the money demand curve. d. people want to hold more money. This response is shown as a shift of the money demand curve.

c

If the investment accelerator from an increase in government purchases is larger than the crowding-out effect, then a. the multiplier is probably equal to one. b. the multiplier is probably zero. c. the multiplier is probably greater than one. d. the multiplier is probably less than one.

c

Other things the same, an increase in the amount of capital firms wish to purchase would initially shift a. aggregate supply left. b. aggregate supply right. c. aggregate demand right. d. aggregate demand left.

c

An increase in the expected price level shifts short-run aggregate supply to the a. right, and an increase in the actual price level shifts short-run aggregate supply to the right. b. right, and an increase in the actual price level does not shift short-run aggregate supply. c. left, and an increase in the actual price level shifts short-run aggregate supply to the left. d. left, and an increase in the actual price level does not shift short-run aggregate supply.

d

If the Federal Reserve increases the money supply, then initially people want to a. sell bonds so the interest rate falls. b. buy bonds so the interest rate rises. c. sell bonds so the interest rate rises. d. buy bonds so the interest rate falls.

d

The recessions of the 1970s are often attributed to a. declining inflation expectations. b. decreases in the money supply. c. declines in the price of stock. d. an increase in oil prices.

d

When a tax is imposed on the buyers of a good, the demand curve shifts

downward by the amount of the tax.

Holding all other forces constant, if increasing the price of a good leads to a decrease in total revenue, then the demand for the good must be

elastic

A surplus is the same as an excess demand.

false

Which of the following is likely to have the most price inelastic demand?

gasoline in the short run

Congress intended that

half the FICA tax be paid by workers, and half be paid by firms.

Joe and Fred are economists. Joe thinks that the wealthiest 10% of the US population should be taxed a rate higher than the rest of society because they can better afford it. Fred thinks that everyone should be taxed at the same rate because that is the fairest scenario and the wealthy should not be penalized for their success. In this example, Joe and Fred

have different normative views about tax policy.

A minimum wage that is set below a market's equilibrium wage will

have no impact on employment.

The efficiency-wage theory of worker turnover suggests that firms with higher turnover will have

higher production costs and lower profits.

Exceptionally favorable growing conditions in the vineyards of Napa Valley would cause a(n)

increase in the supply of wine, decreasing price.

Sheamous loses his job and decides to sit on the beach rather than look for work during the next few months. Other things the same, the unemployment rate

increases, and the labor-force participation rate decreases.

As the reserve ratio decreases, the money multiplier

increases.

If the price elasticity of supply for wheat is less than 1, then the supply of wheat is

inelastic

Which of the following is likely to have the most price inelastic demand?

lightbulbs

Total revenue will be at its largest value on a linear demand curve at the

midpoint of the curve

A perfectly inelastic demand implies that buyers

purchase the same amount as before when the price rises or falls.

Refer to Figure 4-20. If the price is $10, then there would be a

shortage of 600 units, and price would rise.

Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

shortage to exist and the market price of roses to increase.

Efficiency wages create a labor

surplus and so increase unemployment.

Efficiency wages create a

surplus of labor and so raise unemployment.

Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

surplus to exist and the market price of roses to decrease.

A production point is said to be efficient if there is no way for the economy to produce more of one good without producing less of another.

true

All scientific models, including economic models, simplify reality in order to improve our understanding of it.

true

In the circular-flow diagram, households and firms are the decision makers.

true

Refer to Figure 2-14. Unemployment could cause this economy to produce at point B.

true

Refer to Table 29-6. If the Fed's reserve requirement is 5 percent, then what quantity of excess reserves does the Bank of Pleasantville now hold?

$500

In 2015, GDP per person in the United States was almost

$56,000

Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

$8

Refer to Table 28-8. If the state government imposed a minimum wage of $8, how many people would be unemployed?

0

Refer to Figure 2-5. The opportunity cost of obtaining 20 additional dryers by moving from point D to point A is

0 washers.

Refer to Table 24-16. What was the real interest rate in 2014?​

0.9%

Refer to Table 28-2. The labor force of Aridia in 2010 was

1,600

Scenario 28-1 Suppose that the Bureau of Labor Statistics reports that the entire adult population of Mankiwland can be categorized as follows: 25 million people employed, 3 million people unemployed, 1 million discouraged workers, and 1 million people who are either students, homemakers, retirees, or other people not seeking employment. Refer to Scenario 28-1. What is the unemployment rate?

10.7%

In Ugoland, the money supply is $8 million and reserves are $1 million. Assuming that people hold only deposits and no currency, and that banks hold no excess reserves, then the reserve requirement is

12.5 percent

Suppose the Federal Reserve increases bank reserves and banks lend out some of these reserves, but at some point banks still have $5 million more they wish to lend out. If the reserve requirement is 10 percent, how much more money can banks create if they lend out the remaining amount?

50 million

Refer to Figure 2-14. The opportunity cost of moving from point U to point R is

60 bushels of apples.

Suppose that the adult population is 4 million, the number of unemployed is 0.25 million, and the labor-force participation rate is 75%. What is the unemployment rate?

8.3%

If nominal GDP is $10 trillion and real GDP is $12 trillion, then the GDP deflator is

83.33, and this indicates that the price level has decreased by 16.67 percent since the base year.

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor,

All of the above are correct.

If macaroni and cheese is an inferior good, what would happen to the equilibrium price and quantity of macaroni and cheese if consumers' incomes rise?

Both the equilibrium price and quantity would decrease.

Refer to Figure 4-20. At a price of $20, which of the following statements is not correct?

Equilibrium price is equal to equilibrium quantity.

Which of the following statements is correct? a. In order to calculate the inflation rate for the year 2011, we need to know the values of the consumer price index for the years 2009, 2010, and 2011. b. If the prices of all goods and services changed proportionately over time, then the consumer price index would reflect no substitution bias. c. Changes in the consumer price index are often thought to be useful in predicting changes in the producer price index. d. Despite its name, the "consumer price index" really measures the overall cost of the goods and services bought by consumers, business firms, and units of government.

If the prices of all goods and services changed proportionately over time, then the consumer price index would reflect no substitution bias.

Ms. Lane borrowed $1,000 from her bank for one year at an interest rate of 10 percent. During that year, the price level went up by 15 percent. Which of the following statements is correct?

Ms. Lane's repayment will give the bank less purchasing power than it originally loaned her.

The natural rate of unemployment a. arises from a single problem that has a single solution. b. is easy for policymakers to reduce. c. Both a and b are correct. d. None of the above is correct.

None of the above

Refer to Table 5-9. Along which of the supply curves does quantity supplied move proportionately more than the price?

None. Quantity supplied moves proportionately less than the price along all of the three supply curves.

What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?

Price will rise, and the effect on quantity is ambiguous.

Refer to Figure 2-14. Which combination of points show production possibilities only achievable with improvements in technology or increases in resources?

S and X

What would happen to the equilibrium price and quantity of lattés if the cost to produce steamed milk, which is used to make lattés, increased, and scientists discovered that lattés cause heart attacks?

The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous.

Net exports equal

Y - (C + I + G).

As the price level rises a. people will want to buy fewer bonds, so the interest rate rises. b. people will want to buy more bonds, so the interest rate falls. c. people will want to buy more bonds, so the interest rate rises. d. people will want to buy fewer bonds, so the interest rate falls.

a

Economic expansions in Europe and China would cause a. the U.S. price level and real GDP to rise. b. the U.S. price level to fall and real GDP to rise. c. the U.S. price level and real GDP to fall. d. the U.S. price level to rise and real GDP to fall.

a

Figure 33-8. ​ Refer to Figure 33-8. Suppose the economy starts at Z. Stagflation would be consistent with the move to a. P3 and Y1 . b. P1 and Y1 . c. P3 and Y3 . d. P1 and Y3 .

a

Figure 34-1 ​ Refer to Figure 34-1. At an interest rate of 4 percent, there is an excess a. supply of money equal to the distance between points a and b. b. demand for money equal to the distance between points b and c. c. demand for money equal to the distance between points a and b. d. supply of money equal to the distance between points b and c.

a

Figure 34-8 Refer to Figure 34-8. An increase in taxes will a. shift aggregate demand from AD1 to AD3. b. shift aggregate demand from AD1 to AD2. c. have no effect on aggregate demand. d. cause movement from point A to point B along AD1.

a

If the Federal Reserve decreases the money supply, then initially there is a a. shortage in the money market, so people will want to sell bonds. b. shortage in the money market, so people will want to buy bonds. c. surplus in the money market, so people will want to sell bonds. d. surplus in the money market, so people will want to buy bonds.

a

In which of the following cases does the aggregate-demand curve shift to the right? a. The money supply increases, causing the interest rate to fall. b. The money supply decreases, causing the interest rate to fall. c. The price level falls, causing the interest rate to fall. d. The price level rises, causing the interest rate to fall.

a

Other things the same, if the money supply rises by 2% and people were expecting it to rise by 5%, then some firms have a. higher than desired prices, which depresses their sales. b. lower than desired prices, which depresses their sales. c. higher than desired prices, which increases their sales. d. lower than desired prices, which increases their sales.

a

When the price level falls, people want to a. hold less money and the quantity of aggregate goods and services demanded increases. b. hold more money and the quantity of aggregate goods and services demanded increases. c. hold more money and the quantity of aggregate goods and services demanded decreases. d. hold less money and the quantity of aggregate goods and services demanded decreases.

a

Which of the following does not help explain the direction the quantity of aggregate goods demanded changes when the price level decreases? a. the dollar appreciates relative to other currencies b. consumer wealth rises c. each dollar is worth more domestic goods d. borrowing rises

a

Refer to Table 4-12. If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament and the country club sets the ticket price at $30, then there will be

a surplus of 300 tickets.

In which of the following situations will total revenue increase?

all of the above are correct

Consider the market for portable air conditioners in equilibrium. When a heat wave strikes the equilibrium price

and quantity both increase.

A candidate for political office announces the following policies which, she says, economics clearly demonstrates will lead to higher output in the long run: 1. increase immigration from abroad 2. make trade more open between the US and other countries. a. 1 and 2 both shift long-run aggregate supply left. b. 1 and 2 both shift long-run aggregate supply right. c. 1 shifts long-run aggregate supply right, 2 shifts long-run aggregate supply left. d. 1 shifts long-run aggregate supply left, 2 shifts long-run aggregate supply right.

b

According to classical macroeconomic theory, a. output is determined by the supplies of capital and labor and the available production technology. b. All of the above are correct. c. given output and the interest rate, the price level adjusts to balance the supply of, and demand for, money. d. for any given level of output, the interest rate adjusts to balance the supply of, and demand for, loanable funds.

b

If there is excess money supply, people will a. deposit more into interest-bearing accounts, and the interest rate will rise. b. deposit more into interest-bearing accounts, and the interest rate will fall. c. withdraw money from interest-bearing accounts, and the interest rate will rise. d. withdraw money from interest-bearing accounts, and the interest rate will fall.

b

In a certain economy, when income is $400, consumer spending is $325. The value of the multiplier for this economy is 3.33. It follows that, when income is $450, consumer spending is a. $360. For this economy, an initial increase of $50 in consumer spending translates into a $266.67 increase in aggregate demand. b. $360. For this economy, an initial increase of $50 in consumer spending translates into a $166.50 increase in aggregate demand. c. $341.67. For this economy, an initial increase of $50 in consumer spending translates into a $166.25 increase in aggregate demand. d. $341.67. For this economy, an initial increase of $50 in consumer spending translates into a $266.67 increase in aggregate demand.

b

In the short run, a decrease in the money supply causes interest rates to a. increase, and aggregate demand to shift right. b. increase, and aggregate demand to shift left. c. decrease, and aggregate demand to shift right. d. decrease, and aggregate demand to shift left.

b

Initially, the economy is in long-run equilibrium. Aggregate demand then shifts leftward by $50 billion. The government wants to increase its spending in order to avoid a recession. If the crowding-out effect is always one-third as strong as the multiplier effect, and if the MPC equals 0.6, then by how much do government purchases have to increase in order to offset the $50 billion leftward shift? a. by $90 billion b. by $30 billion c. by $20 billion d. by $60 billion

b

Political Instability Abroad Suppose that political instability in other countries makes people fear for the value of their assets in these countries so that they desire to purchase more U.S assets. Refer to Political Instability Abroad. What would the change in the interest rate created by foreigners wanting to buy more U.S. assets do to investment spending in the U.S.? a. make it rise which by itself would increase U.S. aggregate demand. b. make it fall which by itself would increase U.S. aggregate demand. c. make it fall which by itself would decrease U.S. aggregate demand. d. make it rise which by itself would decrease U.S. aggregate demand.

b

The theory of liquidity preference illustrates the principle that a. monetary policy must be described in terms of the money supply. b. monetary policy can be described either in terms of the money supply or in terms of the interest rate. c. monetary policy can be described either in terms of the exchange rate or the interest rate. d. monetary policy must be described in terms of the interest rate.

b

U.S. Financial Crisis Suppose that foreigners had reduced confidence in U.S. financial institutions and believed that privately issued U.S. bonds were more likely to be defaulted on. Refer to U.S. Financial Crisis. What would happen in the market for foreign-currency exchange? a. the supply of dollars would shift left and the exchange rate would rise. b. the supply of dollars would shift right and the exchange rate would fall. c. the supply of dollars would shift right and the exchange rate would rise. d. None of the above is correct.

b

When production costs rise, a. the short-run aggregate supply curve shifts to the right. b. the short-run aggregate supply curve shifts to the left. c. the aggregate demand curve shifts to the left. d. the aggregate demand curve shifts to the right.

b

When the interest rate decreases, the opportunity cost of holding money a. increases, so the quantity of money demanded decreases. b. decreases, so the quantity of money demanded increases. c. decreases, so the quantity of money demanded decreases. d. increases, so the quantity of money demanded increases.

b

Refer to Table 6-2. A price ceiling set at $5 will

be binding and will result in a shortage of 250 units.

Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

between $5 and $7

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

both taxes would fall more heavily on the buyers than on the sellers.

Other things the same, as the price level decreases it induces greater spending on a. net exports but not investment. b. investment but not net exports. c. both net exports and investment. d. neither net exports nor investment.

c

When the dollar appreciates, U.S. a. net exports rise, which increases the aggregate quantity of goods and services demanded. b. net exports rise, which decreases the aggregate quantity of goods and services demanded. c. net exports fall, which decreases the aggregate quantity of goods and services demanded. d. net exports fall, which increases the aggregate quantity of goods and services demande

c

Which of the following shifts short-run, but not long-run aggregate supply right? a. an increase in the money supply b. a decrease in the actual price level c. a decrease in the expected price level d. a decrease in the capital stock

c

Which of the following events would cause the price of oranges to fall?

c. The price of land throughout Florida decreases, and Florida produces a significant proportion of the nation's oranges.

Price ceilings and price floors that are binding

cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price.

A legal maximum on the price at which a good can be sold is called a price

ceiling

If a firm is a price taker, it operates in a

competitive market

Which of the following is an example of depreciation?

computers being obselete

In the calculation of the CPI, tea is given greater weight than beer if

consumers buy more tea than beer.

Which list ranks assets from most to least liquid?

currency, demand deposits, money market mutual funds

Optimism Imagine that the economy is in long-run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people become more optimistic about the future and stay this way for some time. Refer to Optimism. In the long run, the change in price expectations created by optimism shifts a. long-run aggregate supply left. b. short-run aggregate supply right. c. long-run aggregate supply right. d. short-run aggregate supply left.

d

Since the end of World War II, the U.S. has almost always had rising prices and an upward trend in real GDP. To explain this a. it is only necessary that aggregate demand shifts right over time. b. None of the above cases would produce rising prices and growing real GDP over time. c. it is only necessary that long-run aggregate supply shifts right over time. d. both aggregate demand and long-run aggregate supply must be shifting right and aggregate demand must be shifting farther.

d

When the money supply increases a. interest rates fall and so aggregate demand shifts left. b. interest rates rise and so aggregate demand shifts right. c. interest rates rise and so aggregate demand shifts left. d. interest rates fall and so aggregate demand shifts right.

d

When the price level falls a. the interest rate rises, so the quantity of goods and services demand rises. b. the interest rate rises, so the quantity of goods and services demand falls. c. the interest rate falls, so the quantity of goods and services demand falls. d. the interest rate falls, so the quantity of goods and services demand rises.

d

Which of the following correctly explains the crowding-out effect? a. A decrease in government expenditures decreases the interest rate and so reduces investment spending. b. A decrease in government expenditures increases the interest rate and so increases investment spending. c. An increase in government expenditures decreases the interest rate and so increases investment spending. d. An increase in government expenditures increases the interest rate and so reduces investment spending.

d

Which of the following is an example of a decrease in government purchases?​ a. ​The government increases personal income taxes. b. ​The government decreases unemployment insurance benefit payments. c. ​The Federal Reserve sells government bonds. d. ​The government cancels an order for new military equipment.

d

Which of the following is correct? a. An increase in the money supply causes the interest rate to decrease so that aggregate demand shifts left. b. An increase in stock prices reduces consumption spending so that aggregate demand shifts left. c. An increase in the price level causes the exchange rate to rise so that aggregate demand shifts left. d. A recession in other countries reduces U.S. net exports so that U.S. aggregate demand shifts left.

d

If the public decides to hold more currency and fewer deposits in banks, bank reserves

decrease and the money supply eventually decreases.

If the government removes a binding price floor from a market, then the price received by sellers will

decrease, and the quantity sold in the market will increase.

A newspaper article informs you that most businesses reduced production in the last quarter but also sold from their inventories during the last quarter. Based on this information GDP likely

decreased

A tax on the sellers of coffee mugs

decreases the size of the coffee mug market.

A decrease in demand will cause a decrease in price, which will cause a decrease in supply.

false

Economists believe that production possibilities frontiers rarely have a bowed shape.

false

If a line passes through the points (20,5) and (10,10), then the slope of the line is -2.

false

Public service announcements, mandatory health warnings on cigarette packages, and the prohibition of cigarette advertising on television are all policies aimed at shifting the demand curve for cigarettes to the right.

false

Refer to Figure 2-17. Point B represents an inefficient outcome for this economy.

false

The slope of a horizontal line is infinite, and the slope of a vertical line is zero.

false

When quantity supplied exceeds quantity demanded at the current market price, the market has a surplus, and market price will likely rise in the future to eliminate the surplus.

false

Another term for factors of production is

inputs

To which of the problems in the construction of the CPI is the invention of pocket-sized computers most relevant?

introduction of new goods

Refer to Table 29-5. If the bank faces a reserve requirement of 6 percent, then the bank

is in a position to make a new loan of $18,000.

Money

is the most liquid asset

When demand is perfectly inelastic, the price elasticity of demand

is zero, and the demand curve is vertical.

Which of the following increases when the Fed makes open-market sales?

neither currency nor reserves

Refer to Figure 6-13. If the government imposes a price ceiling of $6 on this market, then there will be

no shortage

Rafael is the newly-appointed plant manager for a company that manufactures head phones. Rafael's senior supervisors told him that the output the firm produces, given the number of workers employed, indicates that some workers may be shirking. According to efficiency wage theory, what should he do?

pay all workers more than the equilibrium wage rate

Economists view normative statements as

prescriptive, making a claim about how the world ought to be.

Which government entity computes U.S. GDP every three months?

the Department of Commerce

Refer to Figure 2-8. Point K represents an outcome in which

the economy is using all of its resources to produce hammers.

In the circular-flow diagram,

the factors of production are labor, land, and capital

In the circular-flow diagram, in the markets for

the factors of production, households are sellers and firms are buyers.

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarter(s) does(do) these transactions raise investment?

the first but not the second

The term inflation is used to describe a situation in which

the overall level of prices in the economy is increasing

Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market,

the price of tennis balls does not change

Years ago, thousands of country music fans risked their lives by rushing to buy tickets for a Willie Nelson concert at Carnegie Hall. This behavior indicates

the ticket price was below the equilibrium price.

The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

true

The production possibilities frontier is a graph that shows the various combinations of outputs that the economy can possibly produce given the available factors of production and the available production technology.

true

The production possibilities frontier shows the opportunity cost of one good as measured in terms of the other good.

true

When quantity demanded exceeds quantity supplied at the current market price, the market has a shortage, and market price will likely rise in the future to eliminate the shortage.

true

​Which of the following policies can the Fed follow to increase the money supply?

​Reduce the interest rate on reserves

​When prices rise,

​real estate is a better store of value than money.