If a consumer's demand curve as constant own-price elasticity of -2, the consumer's spending will fall as price increases.
Answer the following statement true (T) or false (F)
True
Rationale: When demand is relatively price elastic (as it is for own-price elasticities below -1), an increase in price causes a sufficient response in the quantity demanded such that spending falls.
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Name two actions a government could take if it wants to implement a contractionary fiscal policy
What will be an ideal response?
A one-time tax rebate, which is not expected to be extended in future years, will
A) have a significant positive effect on consumption and aggregate demand, with aggregate demand growing by a multiple of the tax rebate. B) have no effect on consumption and aggregate demand. C) increase aggregate supply and aggregate demand. D) have a moderately positive effect on consumption and aggregate demand.
Zoran, a Croatian citizen, only works in the United States. The value added to production from his employment is:
A) included in Croatian GDP. B) included only in U.S. GDP. C) included only in U.S. GNP. D) not included in either U.S. GDP or U.S. GNP.
Inflation is defined as
A) the rate of increase in the government budget deficit. B) the increase in the money supply. C) the rate of change in the average level of prices. D) the nominal interest rate minus the price level.