Assume the Congress approves increased drilling for oil in the U.S. to address the current energy shortage. People who are in favor of this policy argue that, ceteris paribus, this would cause:
A) an increase in the equilibrium price and quantity of oil.
B) a decrease in the equilibrium price and quantity of oil.
C) a decrease in equilibrium price and increase in the equilibrium quantity of oil.
D) an increase in equilibrium price and a decrease in the equilibrium quantity of oil.
C
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If the exchange rate value of one U.S. dollar changes from 120 Japanese yen to 140 yen,
a. the U.S. dollar has appreciated relative to the yen. b. the Japanese yen has depreciated relative to the dollar. c. the U.S. dollar has depreciated relative to the yen. d. both a and b have occurred.
Yi and Avik are both economists. Yi thinks that taxing consumption, rather than income, would result in higher household saving because income that is saved would not be taxed. Avik does not think that household saving would respond much to a change in the tax laws. In this example, Yi and Avik
a. hold different normative views about the tax system. b. disagree about the validity of a positive theory. c. have a fundamental misunderstanding of the tax system. d. More than one of the above is correct.