Which of the following is NOT true about a tariff?
A) It is a barrier to entry in a market.
B) It leads to a natural monopoly.
C) It is a tax.
D) It affects imported goods.
Answer: B
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If the price elasticity of demand for a good equals one, then the demand for that good is:
A. inelastic. B. elastic. C. unit elastic. D. perfectly elastic.
Refer to the above figure. If the economy is currently at point C, then an increase in taxes will lead to
A) an increase in the price and an increase in real GDP. B) an increase in the price and a decrease in real GDP. C) a decrease in the price and a decrease in real GDP. D) a decrease in the price and an increase in real GDP.
Spending a lot on advertising:
A. can act as a credible signal to consumers of high-quality products. B. can act as a credible signal to producers to create high quality substitutes. C. does not serve as a credible signal to consumers, since any producer can do it. D. can act as a credible signal to consumers of low-quality products.
If nominal money supply grows 3% and real money demand grows 8%, the inflation rate is
A. 11%. B. 5%. C. -5%. D. 8/3%.