If the market rate of interest is 13%, the growth of nominal GDP 9%, and the growth of real GDP 2%, then
A) the rate of inflation is 11%.
B) the rate of inflation is 4%.
C) the rate of inflation cannot be determined.
D) none of the above
D
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Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ________ and the equilibrium quantity ________
A) rises; increases B) does not change; does not change C) falls; increases D) rises; decreases E) falls; decreases
Consider the supply of orange juice. If the price of orange juice rises, which of the following occurs?
a. Producers of orange juice are satisfied with their revenue and leave production unchanged. b. Producers of orange juice decrease the quantity of orange juice that they produce. c. Producers of orange juice go out of business, and the supply of orange juice shifts to the left. d. Producers of orange juice increase their production of orange juice.
If the price of a cup of coffee increases by 50 percent, the quantity demanded decreases by 50 percent. The price elasticity of demand is:
A. zero. B. elastic. C. unit elastic. D. inelastic.
Refer to the above figure. The market equilibrium quantity is Q1. Point Q2 represents the optimal amount of production. The government can achieve the optimal outcome by
A. setting the price at P3. B. establishing a tax equal to P2 - P1 per unit of the good sold. C. providing a per-unit subsidy to consumers equal to P2 - P1. D. providing a per-unit subsidy to consumers equal to P3 - P1.