If price elasticity of demand is 2.0, this implies that consumers would
a. buy twice as much of the good if price falls by 10 percent
b. require a 2 percent cut in price to raise quantity demanded of the good by 1 percent
c. buy 2 percent more of the good in response to a 1 percent cut in price
d. require at least a $2 increase in price before showing any response to the price increase
e. buy twice as much of the good if the price drops 1 percent
C
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Refer to Figure 13-1. Ceteris paribus, an increase in households' expectations of their future income would be represented by a movement from
A) AD1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point A.
When output is less than the economy's long-run capacity, which of the following is most likely to occur?
a. an abnormally low rate of unemployment b. reductions in real interest rates and real resource prices c. a sharp increase in imports d. a government budget surplus
The Federal Reserve ___
a. oversees the US banking system b. determines the size of M1 and M2 and sets US interest rates c. is the central bank of the US d. all
By using the same ceteris paribus assumptions, economic principles are just as certain and precise as those of the laboratory sciences.
Answer the following statement true (T) or false (F)