When the price of penicillin tablets increases by $5 per dozen, the drug company's revenue increases by $6 million. Its elasticity of demand (in absolute terms) must be
a. zero.
b. greater than one.
c. less than one.
d. infinitely large.
c
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Expansionary fiscal policy leads to a ________
A) leftward shift of the labor supply curve B) rightward shift of the labor demand curve C) leftward shift of the labor demand curve D) rightward shift of the labor supply curve
One of the consequences of a rent ceiling set below the equilibrium rent is
A) decreased search activity. B) increased search activity. C) the establishment of landlord unions. D) surpluses of apartments. E) the elimination of the deadweight loss that would otherwise exist in the housing market.
Which of the following will be most likely to dampen the expansionary effects of an increase in government spending financed by borrowing?
a. The budget deficit will cause business decision makers to become more optimistic. b. The increase in demand for loanable funds as the result of borrowing will cause interest rates to rise and private investment to fall. c. The increase in government spending will cause the money supply to expand, thereby causing an inflationary boom. d. The additional borrowing will cause the central bank to buy more bonds, which will reduce aggregate demand.
Other things the same an increase in the interest rate
a. increases national saving, this is shown by moving along the demand for loanable funds curve. b. increases national saving, this is shown by moving along the supply of loanable funds curve. c. decreases national saving, this is shown by moving along the demand for loanable funds curve. d. decreases national saving, this is shown by moving along the supply of loanable funds curve.