Assume that investment does not depend on the interest rate. A reduction in the money supply will cause which of the following for this economy?
A) no change in the interest rate
B) no change in output
C) a reduction in investment
D) an increase in investment
B
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The figure above shows Clara's demand for CDs. At a price of $5 for a CD, the value of Clara's total consumer surplus for all the CDs she buys is
A) $5. B) $10. C) $25. D) $125.
Which of the following is true of exchange?
a. Exchange is a zero sum activity; if one party to an exchange gains, the other must lose an equal amount. b. The exchange value of a good is determined by the cost of the resources required to produce the good. c. The total output trading partners are able to produce is not influenced by whether the partners trade with each other. d. Exchange permits trading partners to expand their total output of goods and services as the result of greater specialization in areas where each has a comparative advantage.