Since an expensive sports car constitutes a greater portion of a consumer's budget than does laundry soap, the price elasticity of demand for an expensive sports car is _____
a. relatively less elastic
b. unit-elastic
c. perfectly inelastic
d. relatively more elastic
e. perfectly elastic
d
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Cyclical unemployment exists when
A) frictional and structural unemployment is zero. B) real national income exceeds potential income. C) real GDP exceeds potential GDP. D) real GDP is less than potential GDP.
Conflicts of interest arising from management advisory services brought down ________ in 2002
A) Enron B) WorldComm C) Arthur Andersen D) Global Crossing
A tax wedge is ________
A) the difference between the tax rate on income and capital gains B) equal to the difference between what people earn before and after taxes are accounted for C) the size of the decrease in labor force participation when labor income is taxed D) the difference between the rate on Treasury securities and the income tax rate
Suppose the economy is in long-run equilibrium. In a short span of time, there is a large influx of skilled immigrants, a major new discovery of oil, and a major new technological advance in electricity production. In the short run, we would expect
a. the price level to rise and real GDP to fall. b. the price level to fall and real GDP to rise. c. the price level and real GDP both to stay the same. d. All of the above are possible.