As the slope of the aggregate supply curve increases, this indicates that
a. the economy is getting close to potential GDP.
b. the economy is reducing employment.
c. inflation will be less of a problem.
d. output is falling.
a
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You are an economist for the City Subway Commission. Presently, the price of a subway ride is 80¢, and 200,000 seats are filled weekly. The price elasticity of demand for subway rides is -0.40, and the income elasticity of demand is -0.60.
(i) The Commission wants to ensure that the subway has enough excess capacity to handle any extra demand that might occur during an economic decline. If a recession lowered area incomes by 5%, how many additional seats per week would the subway need? (ii) The Commission has just approved a subway price increase of 10¢ per ride. The Commission wants to know if it can use the opportunity to retire two aging subway cars that each provide 8,000 seats weekly. When the price hike goes into effect, can neither, one, or both cars be retired?
In the saving function, autonomous saving is
A) -a + (1 - c)(Y - T). B) (1 - c)Y. C) -a. D) -Y - T.
If net taxes are cut, consumer
a. spending is not affected b. spending increases by the amount of the tax cut c. spending increases by an amount less than the full amount of the tax cut d. saving increases by the full amount of the tax cut e. spending increases by two-thirds of the amount of the tax cut and consumer saving increases by one-third of the amount of the tax cut
Which of the following goods is likely to have the highest income elasticity?
A) a designer blouse B) tomato soup C) hamburger D) can of tuna