Refer to the following graph.
In New York City, the rent on many apartments is set below market rates. As a result, many people find that the only way to obtain an apartment is to make illegal payments to landlords. If Pc is the controlled rent, a best estimate of such "key" money is shown as:
A. Pf.
B. Pf minus Pc.
C. Pe.
D. Pe minus Pc.
Answer: B
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In September 2006, the Food and Drug Administration recommended that Americans avoid eating bagged raw spinach in the wake of an outbreak of E. coli bacteria
Following this recommendation, the food industry looked at alternatives and many turned to arugula. One Chicago distributor claimed, "The sale of the stuff has gone through the roof." Based on this information A) the cross-price elasticity between arugula and spinach is negative. B) the cross-price elasticity between arugula and spinach is positive. C) the price elasticity of arugula is positive while the price elasticity of spinach falls to zero. D) arugula is a normal good while raw spinach is an inferior good.
Liquidity refers to the
A. rapidity with which money flows through the economy. B. ease with which an asset can be converted into cash. C. ease with which banks move funds from checking to savings accounts. D. All of these responses are correct.
How are automatic stabilizers different from discretionary fiscal policies?
If Suzette responds to an increase in the interest rate by decreasing her saving, then, for Suzette,
a. the increase in the interest rate creates an income effect that is greater than the substitution effect. b. the increase in the interest rate creates a substitution effect that is greater than the income effect. c. consumption when young and consumption when old are perfect substitutes. d. consumption when young and consumption when old are perfect complements.