A decrease in supply is caused by:
A) an increase in returns from other alternative activities.
B) suppliers' expectations of lower prices in the future.
C) an advancement in the technology for producing the good.
D) a decrease in the price of a good using the same resources.
Ans: A) an increase in returns from other alternative activities.
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Suppose that for a given firm, the increase in output resulting from the last worker hired is less than the increase in output of the previous worker hired. This is an example of
A) increasing return. B) capital deepening. C) diminishing returns. D) constant returns.
The non-bank public chooses among various financial assets in deciding what kind of liquidity it wants to hold. It thereby increases or decreases
A) the narrowly-defined money stock (M1). B) the reserves of commercial banks. C) the reserves commercial banks are required to hold. D) all of the above, at least potentially. E) none of the above, since only the Fed can alter the money supply.