If demand were inelastic, then we should immediately:
a. cut the price.
b. keep the price where it is.
c. go to the Nobel Prize Committee to show we were the first to find an upward sloping demand curve.
d. stop selling it since it is inelastic.
e. raise the price.
e
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Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. If the price of iced tea is $1
A) not enough consumers want to buy iced tea. B) the quantity supplied is economically efficient but the quantity demanded is economically inefficient. C) economic surplus is maximized. D) the quantity supplied is less than the economically efficient quantity.
Active changes in tax and spending by government intended to smooth out the business cycle are called ________, and changes in taxes and spending that occur passively over the business cycle are called ________
A) discretionary fiscal policy; automatic stabilizers B) automatic stabilizers; monetary policy C) discretionary fiscal policy; conscious fiscal policy D) automatic stabilizers; discretionary fiscal policy
If Bill expects to earn a higher income next month, he may choose to a. save more now and spend less of his current income on goods and services. b. save less now and spend more of his current income on goods and services. c. decrease his current demand for goods and services
d. move along his current demand curve for goods and services.
If aggregate demand increases and, as a result, real domestic output and employment increase but the price level remains unchanged, we can assume that
A. the money supply has declined. B. aggregate demand intersects aggregate supply in the Keynesian range of the aggregate supply curve. C. aggregate demand intersects aggregate supply in the intermediate range of the aggregate supply curve. D. aggregate demand intersects aggregate supply in the classical range of the aggregate supply curve.