The income elasticity of demand for food is roughly 1. A consumer's monthly income is $2,000, of which 20% is spent on food. If the income of this consumer doubles, the amount she'll spend on food will be
A. $800 per month.
B. $1,000 per month.
C. $500 per month.
D. $400 per month.
Answer: A
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If the dollar price of a good manufactured in the U.S. is $6 and the dollar price of the same good manufactured in India is $8, should retailers of the good in the U.S. purchase the good from Indian suppliers or from American suppliers?
What will be an ideal response?
You decide to work in Japan for the next 10 years, accumulate some savings, then move back to the United States and convert your savings from yen to dollars
At the time of your move, economists predict that consumers in the United States have reignited their love of Japanese products, especially hybrid cars, and expect that this strong preference for Japanese products will continue for the next decade. How should this influence your decision to work and save in Japan? A) You should be discouraged as the growing U.S. preference for Japanese goods should increase the value of the yen to the dollar and decrease the value of your savings when converted to dollars. B) You should be encouraged as the growing U.S. preference for Japanese goods should increase the value of the yen to the dollar and raise the value of your savings when converted to dollars. C) You should be discouraged as the growing U.S. preference for Japanese goods should decrease the value of the yen to the dollar and decrease the value of your savings when converted to dollars. D) You should be encouraged as the growing U.S. preference for Japanese goods should decrease the value of the yen to the dollar and raise the value of your savings when converted to dollars.
The function of the interest rate in the Classical model was to keep the economy at full employment equilibrium by assuring that
A) actual saving equaled actual investment. B) actual saving equaled desired investment. C) desired saving equaled desired investment. D) desired saving equaled actual investment.
In year 1, nominal GDP for the United States was $2,250 billion and in year 2 it was $2,508 billion. The GDP deflator was 72 in year 1 and 79 in year 2. Between year 1 and year 2, real GDP rose by:
A. 11.4 percent B. 9.7 percent C. 2.4 percent D. 1.6 percent