As a consumer spends a larger share of his income on a particular good, the price elasticity of demand for that good:
A) increases.
B) decreases.
C) initially decreases then increases.
D) remains the same.
A
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The Keynesian model differs from the classical model in that
a. people do not have perfect information about the future in the Keynesian model. b. real wages are not flexible in the Keynesian model. c. monetary policy affects aggregate demand in the Keynesian model. d. expectations are crucial in the classical model. e. all of the above.
If the economy moves into recession, monetarists argue that the Fed should
A. Keep the money supply growing at a constant rate B. Keep the money supply fixed C. Increased the federal funds rate
Bequest saving is saving:
A. for protection against unexpected setbacks, such as the loss of a job or a medical emergency. B. to meet long-term objectives, such as retirement, college attendance, or the purchase of a home. C. for the purpose of leaving an inheritance. D. done in anticipation of sales or bargain in the future.
Figure 14.5 represents the market for used cars. Suppose buyers are willing to pay $5,000 for a plum (high-quality) used car and $3,000 for a lemon (low-quality) used car. If buyers believe that 80% of used cars in the market are lemons (low quality), how many plums will be supplied in the market?
A. 30 B. 40 C. 70 D. 120