Suppose that the price elasticity of demand for a product is ?1 and that the price elasticity of supply is +1 . Assume also that the income elasticity of demand is +2 . Then an increase in income of 10% will raise equilibrium price by
a. 10%.
b. 5%.
c. 20%.
d. an annual amount that cannot be determined.
a
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If investment spending is interest-sensitive and highly unstable, the Federal Reserve could minimize fluctuations in income by targeting
A) velocity. B) the interest rate. C) the money supply. D) government debt.
If you anticipate that the inflation rate is going to rise from three percent to 10 percent next year, you should
A) save your funds at a fixed rate of interest. B) borrow funds at a fixed rate of interest. C) keep your funds in your sock drawer. D) wait to buy a house until next year.
Which of these statements best represents the law of demand? a. When buyers' tastes for a good increase, they buy more of the good
b. When the size of the consumer population rises, buyers purchase more of most goods. c. When the price of a good decreases, buyers purchase more of the good. d. Changes in preferences lead to changes in demand.
Recall the Application about housing prices in Cuba to answer the following question(s).Recent housing reforms in Cuba should give homeowners ________ incentives to repair their homes and therefore ________ construction of new homes.
A. more; decrease B. more; increase C. fewer; decrease D. fewer; increase