Volkswagen increases the price of a car produced exclusively for export to North America. Which German price index is affected?
A. the CPI
B. the GDP deflator
C. both the CPI and the GDP deflator
D. neither the CPI nor the GDP deflator
Ans: B. the GDP deflator
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What happens if the price of a product is below the equilibrium price?
A) There will be a surplus of the product. B) There will be an excess demand for the product. C) The buyers will stop purchasing a "cheap" product. D) The producer will lower the price to sell more product.
If a polluting producer is forced to pay a pollution charge, what is the effect on the supply and demand curves for the product?
A) The quantity supplied along the firm's supply curve increases. B) The firm's demand curve shifts leftward. C) The firm's supply curve shifts rightward. D) The firm's supply curve shifts leftward. E) Both the supply curve and the demand curve shift leftward.