Answer the following statement(s) true (T) or false (F)
1. If a consumer demands the same (positive) amount of a good no matter what their income, then the income elasticity is also positive.
2. Normal goods have income elasticities greater than 1, while inferior goods have income elasticities less
3. Estimates of the price elasticity of demand depend, in part, on the units used to measure price and
4. The cross elasticity of demand will be positive when goods are substitutes and negative when goods are complements.
1. False
2. False
3. False
4. True
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How does the demand curve facing a monopoly firm compare with the demand curve facing a perfectly competitive firm?
What will be an ideal response?
The aggregate demand curves in Figure 13.1 have a positively-sloped portion. The reason this can happen is ________
A) sloppy editing B) the monetary policy response to declining inflation causes the real interest rate to fall, which causes output to rise C) a sudden increase in potential output D) changes in expected inflation cause the real interest rate to change in the opposite direction E) rising inflation causes financial frictions to increase
Which of the following would cause the demand for labor to change?
a. c and e. b. A change in the cost of living. c. Changes in the wage rate. d. Movements along the labor demand curve. e. A change in the price of the good produced.
____ are unexpected temporary events that can either increase or decrease short-run aggregate supply
a. Profit effects b. Volatilities c. Supply shocks d. Misperception effects