Tariffs are costly to consumers because
A. the supply of the imported good increases.
B. the price of the imported good falls.
C. consumers have to pay higher-prices.
D. import competition increases for domestic goods.
Answer: C
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The value of price elasticity of demand is more likely to be above 1 if:
a. consumers have a long time to adjust to a price change. b. the product is a necessity. c. demand is inelastic. d. there are few close substitutes for the product. e. total revenue declines in response to a price reduction.
If the SRAS curve intersects the AD curve to the right of Natural Real GDP, the economy is
A) in a recessionary gap. B) in either a recessionary gap or an inflationary gap, but we need more information to determine which one. C) in an inflationary gap. D) at full-employment Real GDP.
If the price of inputs rises and consumer expectations about future economic activity worsens:
a. Aggregate demand falls, and aggregate supply rises. b. Aggregate demand and aggregate supply fall. c. Aggregate demand and aggregate supply rise. d. Aggregate demand rises, but aggregate supply does not change. e. Neither aggregate demand nor aggregate supply change.
In general in the U.S., persons classified as poor have money income that amounts to
A. less than half the median income. B. three quarters of the median income. C. the median income. D. half the median income.