If the price elasticity of demand is 2, this means that a ________ increase in price causes a ________ decrease in quantity demanded.
A. 15%; 100%
B. 15%; 10%
C. 20%; 40%
D. 30%; 20%
Answer: C
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When the Fed worries about inflation, it ________ the federal funds rate and, in the short run, ________ the real interest rate
A) raises; raises B) raises; lowers C) lowers; lowers D) does not change; the Fed raises E) lowers; raises
Technology is
A) society's pool of knowledge of how to produce goods and services. B) a resource like land or physical capital. C) computers and lasers. D) not obtainable by engaging in activities that increase human capital.
Which of the following will not cause a demand curve to shift position?
a. A doubling of the good's price. b. A doubling of the price of a closely substitutable good. c. A doubling of income. d. A shift in preferences. e. A doubling of both the price of X and the price of Y.
The proponents of rational expectations believe that:
a. there will be a substantial time lag before people anticipate the eventual effects of a shift to a more expansionary macro-policy. b. macro-policies that stimulate demand and place upward pressure on the general level if prices will temporarily increase output and employment. c. the inflationary side effects of expansionary policies will be anticipated quickly, and therefore, even their short-run effects on real output and employment will be minimal. d. discretionary changes in macro-policy can be made in a manner that will reduce the economic ups and downs of a market economy.