Which of the following is the most likely reason for a coffee seller to change the price of coffee from P1 to P2?
a. The demand for decaf coffee increased.
b. The coffee crop reached the expected yield.
c. Ideal weather created a high yield of coffee.
d. Insects reduced the coffee yield.
c. Ideal weather created a high yield of coffee.
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The assumption that nothing changes EXCEPT the variables being studied is
A) the ceteris paribus assumption. B) the rationality assumption. C) positive economic analysis. D) normative economic analysis.
Refer to the graphs, in which the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve. All figures are in billions. The economy is at point X on the investment demand curve. Given these conditions, what policy should the Fed pursue to achieve a noninflationary full-employment level of real GDP?
A. Decrease aggregate demand from AD1 to AD2
B. Increase the money supply from $75 to $150 billion
C. Increase interest rates from 4 to 8 percent
D. Make no change in monetary policy