Which of the following statements is correct for the price elasticity of demand along a linear, downward-sloping demand curve?
A) The price elasticity of demand is constant because the slope is constant.
B) At low prices, demand is elastic but at high prices demand is inelastic.
C) At high prices, demand is elastic but at low prices demand is inelastic.
D) The price elasticity of demand is not defined for a linear demand curve because the slope is constant.
E) None of the above answers is correct.
C
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Research in history and economic history shows that before 1880,
(a) there was some government intervention in the private sector of the American economy. (b) there was substantial federal regulation of private business organization but little influence in the economy otherwise. (c) the regulation and participation that existed were usually of a background nature and were not concerned with the details of day-to-day private business. (d) laissez faire was the rule so far as the federal government was concerned.
Ceteris paribus, if consumer tastes change so that more people are eating broccoli, then what will happen to the market equilibrium for cabbage, a substitute good for broccoli?
a. Price will increase, and quantity will increase. b. Price and quantity will stay the same. c. Price will decrease, and quantity will increase. d. Price will increase, and quantity will decrease. e. Price will decrease, and quantity will decrease.
Central banks get the purchasing power to buy foreign exchange by:
a. Buying government securities. b. Reducing currency in circulation. c. Increasing their liabilities in the form of deposits from banks. d. Taking loans from the government.
The Federal Open Market Committee
a. by law must focus on maintaining low inflation rather than stabilizing output. b. by law must focus on stabilizing output rather than maintaining low inflation. c. by law must follow a mechanical rule that takes into account deviations of unemployment from its natural rate and deviations of inflation from a target. d. operates with almost complete discretion over monetary policy.