Suppose you are the manager of a local water company, and you are instructed to get consumers to reduce their water consumption by 10 percent. If the price elasticity of demand for water is 0.25, by how much would you have to raise the price of water?
A. 10 percent
B. 25 percent
C. 40 percent
D. 100 percent
Answer: C
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________ emphasize(s) that changing expectations about the future is the main reason behind fluctuations in the economy
A) The real business cycle theory B) Keynesian theory C) Ricardian theory D) Monetary theories
Shortages normally accompany an effective price floor
a. True b. False Indicate whether the statement is true or false
If their only concern were the cost of issuing municipal debt, how would you expect the mayors of most U.S. cities to respond to a revenue-neutral change in the federal income tax that sharply lowered the top marginal tax rate?
A. No reaction, this should have no impact on municipal bonds at all. B. Favorably, the price of municipal bonds should increase and their yields fall. C. Unfavorably, the demand for municipal bonds will fall and their yields will increase. D. Favorably, since this will significantly increase the demand for municipal bonds.
If households and firms expect higher rates of inflation, the ________ curve will shift ________.
A. SRAS; upward B. AD; until it becomes vertical C. SRAS; downward D. AD; rightward