If goods A and B are considered substitutes, a decrease in the price of A would cause
A. a movement along the demand curve for B to a (lower price, higher quantity) point.
B. the demand curve for B to shift to the left.
C. a movement along the demand curve for B to a (higher price, lower quantity) point.
D. the demand curve for B to shift to the right.
Answer: B
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A less-developed country would probably use ___________ to argue for trade restrictions
a. national security b. infant industry c. protection of workers from cheap foreign labor d. antidumping e. increased efficiency
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y1. C. P3 and Y1. D. P3 and Y2.
If a country experienced deflation, then
a. the nominal interest rate would be greater than the real interest rate. b. the real interest rate would be greater than the nominal interest rate. c. the real interest rate would equal the nominal interest rate. d. nominal GDP would be smaller than the money supply.
If the quantity of bread demanded rises 2 percent when the price of bread declines 10 percent, then the price elasticity of demand is:
A. 0.2. B. 2. C. 5. D. 10.