When new farmers enter the wheat industry, the equilibrium price of wheat
a. always falls.
b. falls only if existing firms gang up on the entrant.
c. falls only if existing firms are earning no economic profit.
d. falls only if the new firm is more efficient than existing firms.
a
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If more people find jobs, the unemployment rate will definitely fall
a. true b. false
Suppose the money demand function is given by Md/P = 640 + 0.1Y - 5000 (r + ?e). Suppose the central bank changes the nominal money supply depending on income and inflation: Ms = 1000 + 0.1Y - 4000?
(a) If expected inflation equals actual inflation = 0.03, Y = 1000, and r = 0.02, calculate the price level. (b) If inflation rises to 0.04 while the other variables remain as in part a, calculate the price level. (c) If expected inflation rises to 0.04 while the other variables remain as in part a, calculate the price level. (d) If the real interest rate rises to 0.03 while the other variables remain as in part a, calculate the price level.