In order to avoid problems involved with calculating percentage changes over a wide range, economists use the base or midpoint formula to calculate percentage changes when measuring the price elasticity of demand
a. True
b. False
Indicate whether the statement is true or false
True
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Everything else equal, if the dollar depreciates against the Chinese yuan:
A) China will stop trading with the U.S. B) China will import more from the U.S. and will export less to the U.S. C) China will export more to the U.S. and will import less from the U.S. D) the Chinese government will buy yuan from the foreign exchange market.
Much of macroeconomics is concerned with advising governments on ways to ________ business cycles, since it is desirable to ________
A) amplify, create the greatest cyclical peaks possible B) amplify, create deep recessions to cool down the economy C) dampen, avoid both very low troughs and very high peaks D) dampen, keep the economy at its maximum productive capacity
Define the following terms and explain their importance to the study of economics
a. public good b. externality c. irreversible decision d. moral hazard e. rent seeking
Does voluntary exchange create wealth?
a. No, exchange merely shuffles the existing supply of goods and services among people. b. No, if one person gains, the other party must lose an equal amount. c. Uncertain, it will increase wealth if it creates more goods and services; otherwise it exerts no impact on the wealth of people. d. Yes, exchange makes it possible for the trading partners to gain more value from the existing supply of goods and it also makes larger output levels possible.