If a construction boom leads to an increase in the price of lumber, how will the higher lumber prices influence the wood furniture market?
a. The demand for wood furniture will decline, and furniture prices will fall.
b. There will be a shortage of wood furniture.
c. There will be a surplus of wood furniture.
d. The supply of wood furniture will decline, and furniture prices will increase.
D
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Which of the following will make the real-world money multiplier smaller than the theoretical formula?
a. Banks actually hold fewer reserves than technically required by the Fed. b. Banks actually make loans for more money than they have in excess reserves. c. Banks may keep some excess reserves rather than loan it all out. d. Both a. and b. above are correct.
The labor supply curve reflects how
a. workers' decisions about the labor-leisure tradeoff respond to a change in the wage. b. workers' decisions about the opportunity cost of labor respond to a change in the quantity of labor supplied. c. firms' decisions about the labor-leisure tradeoff respond to the quantity of labor demanded. d. firms' decisions about how the quantity of labor they hire respond to changes in their opportunities to earn profits.