For each of the following changes, show the effect on the demand curve and state what will happen to market equilibrium price and quantity in the short run
a. Consumers expect that the price of the good will be higher in the future.
b. The price of a substitute good rises.
c. Consumer incomes fall, and the good is normal.
d. Consumer incomes fall, and the good is inferior.
e. A medical report is published showing that this good is hazardous to your health.
f. The price of the good rises.
a. Demand increases (now); equilibrium price and quantity increase.
b. Demand increases; equilibrium price and quantity increase.
c. Demand decreases; equilibrium price and quantity fall.
d. Demand increases; equilibrium price and quantity increase.
e. Demand decreases; equilibrium price and quantity fall.
f. This is a movement along the demand curve, and the quantity demanded will decrease.
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Which of the following is likely to be true if the Fed buys government bonds held by the U.S. commercial banks? a. Banks will reduce the amount of loans, and this will increase the money supply in the economy. b. Banks will give more loans, and this will increase the money supply in the economy
c. Banks will give more loans, and this will decrease the money supply in the economy. d. Banks will reduce the amount of loans, and this will decrease the money supply in the economy.
In a fixed exchange rate system
A. market forces play a role in determining the fixed value of a currency. B. a central bank affects the value of a currency by changing its foreign exchange reserves. C. the International Monetary Fund determines exchange rates. D. market forces and the country's stock of gold determine its exchange rate.