The income elasticity of demand
A) is positive only.
B) is negative only.
C) must lie between -1 and +1.
D) can be positive, negative, or zero.
Answer: D) can be positive, negative, or zero.
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
What is a positive statement? Give an example
What will be an ideal response?
The above figure shows the demand curve for dollars in the yen/dollar exchange market. A movement from point A to point B means that the
A) quantity supplied of dollars has increased. B) quantity demanded of dollars has increased. C) quantity demanded of dollars has decreased. D) quantity demanded of yen has decreased.
A dictator is most likely to
A) adopt a Rawlsian social welfare function. B) maximize her own utility. C) place equal weight on everyone's utility function. D) have nontransitive preferences.