Suppose that in a month the price of pizza increases from $4 to $5. At the same time, the quantity of pizzas demanded decreases from 200 to 190. The price elasticity of demand for pizza (calculated using the midpoint formula) is:
A. zero.
B. inelastic.
C. unit elastic.
D. elastic.
Answer: B
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According to the Taylor rule, the Fed will set the federal funds rate target based on which of the following?
A) an estimated long-run real interest rate B) the current deviation of the actual inflation rate from the Fed's inflation objective C) the proportionate gap between actual real GDP and a measure of potential real GDP D) all of the above
If an individual's supply of labor curve is positively sloped throughout, then:
a. the substitution effect always dominates the income effect. b. the income effect always dominates the substitution effect. c. the substitution effect dominates at low real wage levels and the income effect dominates at high real wage levels. d. the income effect dominates at low real wage levels and the substitution effect dominates at high real wage levels.
The government would use production taxes to remedy the problem of substantial:
a. internal benefits of production. b. external benefits of production. c. external costs of production. d. external benefits of consumption e. external costs of consumption.
In answering which of the following questions would you find it necessary to calculate a present value?
a. Should Jane put $1,000 today into a 5-year certificate of deposit that pays 4 percent annual interest? b. Should ABC Corporation buy a factory today for $2 million, knowing that the factory will yield the corporation $3 million after 5 years? c. If Jill puts $5,000 today into a bank account that pays 3 percent interest, then how much will she have in the account after 2 years? d. You would find it necessary to calculate a present value in order to answer all of these questions.