1. Assume that the market for computers begins in equilibrium. Then, there is a decrease in a price of Pentium processors used in the production of computers. When the new equilibrium is reached,
a. the price and quantity of computers will both have risen
b. the price and quantity of computers will both have fallen
c. the price of computers will have risen and the quantity will have fallen
d. the price of computers will have fallen and the quantity will have risen
2. Assume that the market for the stock of Microsoft begins in equilibrium. Then, both buyers and sellers expect that the new Linux (a competitor of Microsoft Windows) will be a large success, reduing Microsoft sales. When the new equilibrium is reached,
a. the price and quantity of the stock will both have risen
b. the price and quantity of the stock will both have fallen
c. the quantity of the stock will fall and the price will rise
d. the quantity of the stock will fall but the effect on price cannot be determined
e. the price of the stock will fall but the effect on quantity cannot be determined
3. Assume that the market for Mexican pesos begin in equilibrium. Then, the Mexican economy experiences a severe recession. Because of the recession, the Mexican companies lower their prices. As a result of the recession and lower prices in Mexico:
a. the dollar depreciates and the peso appreciates c. the dollar and the peso both appreciate
b. the dollar appreciates and the peso depreciates d. the dollar and the peso both depreciate
4. Which of the following is an example of "portfolio investment"?
a. An American places funds in a savings account in Canada
b. Tokyo Bank of Japan buys Union Bank of the United States
c. Saturn Corp. (owned by General Motors) builds a new factory in Tennessee
d. An American puts $10,000 into a money market fund
e. All of the above
5. Which of the following would cause the aggregate demand curve to shift to the right?
a. an increase in purchases by the federal government
b. an increase in real interest rates
c. an appreciation of the American dollar
d. a decrease in the money supply