Suppose the economy of Catalania is experiencing a recession and policy makers decide to implement an expansionary monetary policy. It takes more than a year to implement the recommended policy measures. This is an example of a(n):
a. liquidity trap

Answer the following statements true (T) or false (F)

1. The slope of a graph relating two variables is -5. This indicates that as one variable decreases, the other variable also decreases. 2. In the graph for the linear equation S = 15 - 5T, with T on the horizontal axis, the vertical intercept of the graph is -5. 3. In a curved graph that is dome-shaped, the tangent line at it maximum or highest point has an infinite slope. 4. A market system is characterized by the private ownership of resources and the use of prices to coordinate economic activity.

According to the figure, if MiiTunes charges low prices, The Rock Shop should:

This figure displays the choices and payoffs (company profits) of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to make a profit at such low prices. The Rock Shop is trying to decide whether or not it should enter the market and compete with MiiTunes.

A. enter the market and earn $4 million.
B. enter the market and lose $2 million.
C. not enter the market and earn $0.
D. It cannot be determined what The Rock Shop will do.