The price elasticity of demand measures the responsiveness of quantity demanded to changes in price
a. True
b. False
A
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If there are strong expectations of future economic growth, then the:
a. economy will move to the right along the existing consumption function. b. economy will move to the left along the existing consumption function. c. consumption function will shift downward. d. consumption function will shift upward. e. investment demand curve will shift upward.
The equilibrium in the market for loanable funds is:
A. at the interest rate set by the Fed. B. at the price at which the quantity supplied is slightly greater than quantity demanded. C. where the amount being borrowed and the amount being saved is the same. D. where the amount being saved is enough for banks to cover required reserves.
Suppose business confidence decreases causing a reduction in investment. Based on our understanding of the model presented in Chapter 3, we know with certainty that a reduction in investment will cause
A) an increase in the multiplier. B) a reduction in the multiplier. C) a reduction in the marginal propensity to save. D) a reduction in consumption as the economy adjusts to this decrease in investment.
The price of chocolate chips has increased. For the producers of chocolate chip cookies, this means:
A. they can supply more at each price because some of the competition will drop out. B. they can supply less at each price because the price of a main input has gone up. C. they can supply more at each price because the price of a main input has gone up. D. they can supply more at each price because of more competition.