If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a
a. 0.2 percent decrease in the quantity demanded.
b. 5 percent decrease in the quantity demanded.
c. 20 percent decrease in the quantity demanded.
d. 40 percent decrease in the quantity demanded.
c
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Which of the following is most likely to happen if the aggregate demand curve for an economy (which was initially in equilibrium) shifts to the left? a. The equilibrium real GDP will decrease
b. The equilibrium price level in the economy will increase. c. The aggregate supply curve will shift rightward. d. The aggregate supply curve will shift leftward. e. The economy will experience an expansion.
People in developing countries may want to participate in a rotating savings and credit association (ROSCAS) because:
a. such associations are part of the black market and they offer attractive returns. b. such associations promise a guaranteed return unlike other banking institutions. c. such associations allow participating individuals to invest their savings abroad. d. such associations allow all but the last member to receive funds faster than they could save on their own. e. most governments encourage it.
Real, rather than nominal, figures are important to use when making comparisons of incomes across time periods because
A) the real figures are adjusted for changes in the general level of prices. B) the real figures are adjusted for changes in the level of interest rates. C) the real figures are adjusted for changes in the average hours worked per week. D) the real figures are adjusted for changes in taxes.
On which point on the graph above should the economy operate if it wants to maximize its future production possibilities?
a. A b. B c. C d. D