Suppose the economy experiences a recessionary gap. Expansionary monetary policy will
A) increase real GDP and increase the price level.
B) increase real GDP and decrease the price level.
C) decrease real GDP and increase the price level.
D) decrease real GDP and decrease the price level.
Ans: A) increase real GDP and increase the price level.
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Which of the following is true with respect to the price elasticity of demand?
a. The coefficient of price elasticity of demand will change with changes in the units of measurement (for instance, going from pounds to ounces). b. Elasticity of demand is equal to the slope of the demand curve. c. Elasticity measures the sensitivity of total expenditure to a change in price of a good. d. Elasticity will tend to be greater for a relatively expensive product than for a cheaper one. e. A coefficient of 1 means that the percentage change in total expenditure is equivalent to the percentage change in price.
When property rights are well defined and markets are competitive,
a. the total gains from trade (the combined area of producer and consumer surplus) are maximized at the market equilibrium. b. the market equilibrium is consistent with economic efficiency in that all units creating more benefit than cost have been produced. c. the market will automatically move toward the price and quantity where the quantity supplied and the quantity demanded are in balance. d. all of the above are true.
A decrease in the quantity of labor supplied in response to a higher wage would be due to the:
A. price effect. B. tax effect. C. substitution effect. D. income effect.
Which statement is true?
A. After settling its case with the Justice Department, Microsoft will not face any further serious litigation for at least another decade. B. Most of the largest corporate mergers in U.S. history took place between 1985 and 1995. C. Deregulation has been a complete failure. D. The history of antitrust goes back to the late 19th century.