If borrowers and lenders expect a higher rate of inflation,
a. nominal interest rates should decrease.
b. nominal interest rates should remain constant.
c. nominal interest rates should increase.
d. real interest rates should increase.
c
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An 18 percent increase in the price of a small car results in a 10 percent increase in the quantity supplied. The price elasticity of supply is equal to
A) 1.80. B) 0.55. C) 0.75. D) 0.40.
Suppose an economy produces milk and honey, and milk is plotted along the horizontal axis of the production possibilities frontier
If the production in the economy is centrally planned (and not market oriented) so that the MRS for the current production level is 3 but the MRT is 2, then there will be an excess ________ for milk and an excess ________ for honey. A) demand, supply B) demand, demand C) supply, demand D) supply, supply E) The market is in equilibrium, and there are no imbalances in supply or demand.