Related to the Economics in Practice on page 102: Which of the following best explains why demand is often more elastic in the long run than it is in the short run?
A. Consumers tend to postpone making purchasing decisions as long as possible.
B. In the short run, prices can change rapidly, but in the long run they are more stable.
C. When demand is elastic, price increases reduce revenue because a small price increase will lead to a large decrease in quantity demanded.
D. In the long run, consumers have greater access to substitutes.
Answer: D
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Refer to Figure 27-5. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, and no fiscal or monetary policy is pursued, then at point B
A) the economy is above full employment. B) firms are operating below capacity. C) there is pressure on wages and prices to rise. D) income and profits are rising. E) the unemployment rate is very low.
A worldwide system of fixed exchange rates was organized and maintained under the International Monetary Fund
A) in the three decades before World War I. B) in the years between the world wars. C) from the end of World War II until the early 1970s. D) from the early 1960s to the late 1980s.
According to public choice theorists, the primary concern of policy makers is
a. the public interest b. achieving a social optimum for the economy as a whole c. to protect their jobs d. the provision of public goods e. market failure
Most economists agree that the immediate cause of the large majority of cyclical changes in the levels of real output and employment is unexpected changes in:
What will be an ideal response?