The determinants of elasticity include
A. time.
B. price relative to income.
C. availability of substitutes.
D. all of the above
Answer: D
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Keynesians believe in
a. active management of structural deficits an minimal cyclical deficits. b. running structural budget deficits to stimulate output c. running large surpluses during expansions. d. active management of cyclical deficits and minimal structural deficits. e. both c and d.
An example of a quantity restriction is
A) the minimum wage. B) an import quota. C) rent controls. D) price supports in agriculture.
A supply shock is a surprise occurrence that
a. shifts the long-run aggregate supply curve to the right. b. either increases or decreases short-run aggregate supply and output. c. temporarily increases aggregate demand. d. temporarily reduces aggregate demand.
Consider demand curve D in Figure 5-2. Between points F and G, the price elasticity of demand is
Figure 5-2
a.
1
b.
0.5
c.
2
d.
0.2
e.
none of these