Given that energy is an input in production, the development of a cheaper source of energy will result in:
a. a lower price level and a lower amount of production.
b. a higher price level and a higher amount of production.
c. a lower amount of production at every price level.
d. a higher amount of production at every price level.
e. a lower profit at every price level.
d
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If the price of a product falls, that product becomes cheaper and people will want to purchase more of it in place of other goods. This statement best describes:
A) the income effect. B) the substitution effect. C) a complementary good. D) an inferior good.
When the Fed buys $100 million of securities from a commercial bank the
A) required reserve ratio decreases. B) monetary base increases. C) bank's reserves decrease. D) bank is risking its depositors' money. E) money supply decreases.