A simultaneous increase in demand and decrease in supply would lead to:
a. An increase in the equilibrium price and a decrease in the quantity sold.
b. An increase in both the equilibrium price and the quantity sold.
c. A decrease in both the equilibrium price and the quantity sold.
d. An uncertain effect on the equilibrium quantity but an increase in the equilibrium price.
Question 2An decrease in taxes combined with a decrease in government purchases would:
a. increase AD.
b. decrease AD.
c. leave AD unchanged.
d. have an indeterminate effect on AD.
Question 3When you save 1,500 for a spring-break vacation in Cancun, you are using money as a standard of deferred payment.
a. True
b. False
Indicate whether the statement is true or false
Question 4A safety report is released that contends that sport utility vehicles are less prone to roll over during crashes than was previously thought. At the same time, the price of steel (used to produce motor vehicles) decreases. The net effect of these two incidents on the market for sport utility vehicles is a(n):
a. indeterminate change in price and an increase in equilibrium quantity.
b. indeterminate change in price and a decrease in equilibrium quantity.
c. decrease in price and an increase in equilibrium quantity.
d. increase in price and an increase in equilibrium quantity.
Question 5A cut in taxes, combined with an increase in government purchases, would:
a. increase AD.
b. decrease AD.
c. leave AD unchanged.
d. have an indeterminate effect on AD.
Question 6A 1,000 price tag on a stereo system is an example of money as a unit of account.
a. True
b. False
Indicate whether the statement is true or false
Question 7A safety report is released that contends that sport utility vehicles are more prone to roll over during crashes than was previously thought. At the same time, the price of steel (used to produce motor vehicles) increases. The net effect of these two incidents on the market for sport utility vehicles is a(n):
a. decrease in price and an increase in equilibrium quantity.
b. decrease in price and a decrease in equilibrium quantity.
c. increase in price and a decrease in equilibrium quantity.
d. indeterminate change in price and a decrease in equilibrium quantity.
Question 8Other things equal, an increase in government purchases combined with an equal increase in taxes would:
a. increase AD.
b. decrease AD dramatically.
c. decrease AD slightly.
d. leave AD unchanged.
Question 9Using money as a unit of account lowers information costs compared to barter exchanges.
a. True
b. False
Indicate whether the statement is true or false
Question 10In an effort to reduce the surplus of dairy products, agricultural legislation paid dairy farmers to slaughter their herds and sell them to packinghouses (meat producers) in 1996-1997 . How did this influence the market for beef?
a. demand increased, leading to higher beef prices
b. demand decreased, leading to lower beef prices
c. supply increased, leading to lower beef prices
d. supply decreased, leading to higher beef prices
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