What does unitary demand mean?
a) The elasticity of demand is mathematically determined
b) The elasticity of demand is different at each unit on the price range
c) The demand is inelastic at a low price but becomes elastic as the price rises
d) The percentage change in the quantity demanded is exactly equal to the percentage change in price
Ans: d) The percentage change in the quantity demanded is exactly equal to the percentage change in price
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Everything else remaining the same, in the foreign exchange market, which of the following increases the supply of U.S. dollars?
A) The U.S. interest rate rises. B) The U.S. interest rate differential increases. C) The expected future exchange rate rises. D) The European interest rate rises. E) The exchange rate falls.
Everything else held constant, if a central bank makes an unsterilized sale of foreign assets, then the domestic money supply will ________ and the domestic currency will ________
A) increase; appreciate B) increase; depreciate C) decrease; appreciate D) decrease; depreciate
It can be shown that average revenue and price are always equal.
Answer the following statement true (T) or false (F)
The government wishes to close a recessionary gap by increasing national income by $700 billion. The MPC = 0.8 . Two policies are offered. Policy A calls for $180 billion in increased government spending and $50 billion in increased taxes. Policy B calls for $200 billion in increased government spending and $100 billion in increased taxes. Which of the following will increase the national income
by the desired $700 billion? a. Both policies increase national income by $700 billion but Policy B offers a lower budget deficit. b. Both policies increase national income by $700 billion and create equal budget deficits. c. Neither policy increases national income by $700 billion. d. Only Policy A increases national income by $700 billion. e. Only Policy B increases national income by $700 billion.