A U-shaped curve has a positive slope everywhere
a. True
b. False
B
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If federal taxes are cut by $10 billion, aggregate demand
A) increases by $10 billion. B) increases by $10 billion multiplied by the government expenditure multiplier. C) increases by $10 billion multiplied by the tax multiplier. D) decreases by $10 billion. E) decreases by $10 billion multiplied by the tax multiplier.
When the price of oranges increases from $4 to $6 per bag, the quantity demanded of oranges decreases from 800 bags to 700 bags. The price elasticity of demand over this price range is equal to
A) 3. B) 3/7 or 0.4286. C) 1/3 or 0.3333. D) 1/4 or 0.25.
Elasticity of demand equals the ratio of the percentage change in the quantity demanded to the percentage change in the price of the good.
Answer the following statement true (T) or false (F)
Voluntary exchange increases economic efficiency
A) because neither the buyer nor the seller would agree to a trade unless they both benefit. B) because voluntary exchange only takes place with government permission. C) because it allows wealthy individuals to act altruistically and give to the poor. D) because it is free and consequently does not cost anything.