The price elasticity of demand is calculated by:
A. the change in price divided by the change in quantity demanded.
B. the change in quantity demanded divided by the change in price.
C. the percentage change in price divided by the percentage change in quantity demanded.
D. the percentage change in quantity demanded divided by the percentage change in price.
Answer: D
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Which of the following rises during a recession?
A) Gross Domestic Product B) Investment C) Unemployment D) Consumption
According to the rational expectations school, _____
a. on average people have very little idea of what to expect from government policy makers b. people form expectations by focusing only on the private sector c. changes in the expected price level shift the aggregate demand curve d. people do not consider likely government policies when forming expectations, choosing to remain rationally ignorant e. people form expectations, in part, by considering the probable future actions of government policy makers
A complicating factor in international trade is that
a. barter is the basis for trade between countries; money is not used. b. gold is used for payments; there are no international payments without gold. c. many other countries prefer to use the U.S. dollar as currency, causing monetary shortage in the United States. d. trade between countries requires different currencies rather than one currency.
Monetary stimulus may be ineffective if
A. People usually respond to lower interest rates by consuming more goods and services. B. The investment demand curve is inelastic. C. Expectations of a boom cause the investment demand curve to shift to the right, offsetting interest rate effects that would stimulate the economy. D. The investment demand curve is horizontal.