The owner of a pizza shop observes that when she raises the price of a large pizza, her total revenue decreases, and when she lowers the price of a large pizza, her total revenue increases. This suggests that:
A. the demand for her large pizzas is inelastic with respect to price.
B. there are few good substitutes for a large pizza.
C. the demand for her large pizzas is elastic with respect to price.
D. pizza lovers act irrationally.
Answer: C
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If investment has a low sensitivity to the interest rate, the IS curve is rather __________, so that monetary policy has a __________ effect on GDP
A) flat; strong B) flat; weak C) steep; strong D) steep; weak
Why is monetary policy more effective in an open economy than in a closed economy?
A. Trade deficits affect exchange rates, which can offset adverse interest rate effects. B. Borrowers can choose to use foreign capital, so that interest rate effects are stronger than expected. C. Interest rate changes affect exchange rates, so that capital flows reinforce the effect of monetary policy. D. Banks can choose to lend to foreigners, so that interest rate effects are essentially nullified.
Economists at the Congressional Budget Office estimated that for 2015, the U.S. natural rate of unemployment was
a. 2.8% b. 3,.6% c. 4.9% d. 6.2%
Answer the following statement true (T) or false (F)
1) Although sleeping in on a work day or school day has an opportunity cost, sleeping late on the weekend does not. 2) An economy will always operate at some point on its production possibilities curve. 3) In drawing a particular budget line, money income and the prices of the two products are fixed. 4) The lower the consumer's income, the higher his or her budget line.