Distinguish between "a change in demand" and "a change in quantity demanded." What are the causes of each type of change and how do we illustrate them graphically?
What will be an ideal response?
A "change in demand" refers to a shift of the entire demand curve. It is caused by a change in a determinant of demand other than the price of the good in question. A change in quantity demanded refers to a movement along the demand curve for a good. It is caused by a change in the price of the good in question.
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Why do people often tend to take risks if they are insured?
What will be an ideal response?
Cross elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good.
Answer the following statement true (T) or false (F)
When the actual rate of inflation exceeds the expected rate:
A. the unemployment rate will temporarily rise. B. firms will experience rising profits and thus increase their employment. C. the actual rate of inflation will fall. D. nominal wages will decline.
Refer to the information provided in Figure 27.3 below to answer the question(s) that follow.
Figure 27.3Refer to Figure 27.3. Cost-push inflation occurs if
A. the aggregate supply curve shifts from AS1 to AS2. B. the aggregate supply curve shifts from AS1 to AS0. C. the economy moves from Point A to Point B on aggregate supply curve AS1. D. the economy moves from Point A to Point C on the aggregate supply curve AS1.