What happens to the quantity of cell phones supplied and the supply of cell phones if the price of a cell phone falls?
What will be an ideal response?
If the price of cell phones falls and nothing else changes, then the quantity of cell phones supplied will decrease and there is a movement down along the supply curve for cell phones. The supply of cell phones, however, remains unchanged and the supply curve does not shift.
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Suppose the economy is producing at the natural rate of output. An open market purchase of bonds by the Fed will cause ________ in real GDP the the short run and ________ in inflation in the short run, everything else held constant
A) an increase; an increase B) a decrease; a decrease C) no change; an increase D) no change; a decrease
A liquidity trap is
a. the vertical portion of the LM schedule. b. the horizontal portion of the LM schedule. c. a situation where a given change in the money stock induces a large reduction in the interest rate. d. Both a and c e. Both b and c