When EP /P rises
A) IM will rise.
B) IM will fall.
C) IM may rise or fall.
D) IM is not affected.
E) IM and P* will both rise.
C
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
If a decrease in income leads to an increase in the demand for macaroni, then macaroni is
A) an inferior good. B) a necessity. C) a neutral good. D) a normal good.
The cross-price elasticity of demand of products "M" and "N" is zero. This implies that "M" and "N" are
A) substitute products. B) complementary products. C) independent products. D) unique goods, as the price elasticity of demand for one of them is zero.
Companies spend ____ on pricing decisions
A) too much time B) the right amount of time C) too little time D) too much money