Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a ton to $180 a ton and quantity sold decreased from 800 tons to 240 tons. What is the absolute value of the price elasticity of demand?
A) 0.11
B) 0.37
C) 2.69
D) 9.33
Answer: C
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In 2008, the Fed created a new policy tool called
A) federal funds zero-rate, which required the Fed to lower the rate to near zero percent. B) open market operations, which required the Fed to buy securities from only the federal government. C) quantitative easing, which required the Fed to pay interest on required reserves. D) interest rate reductions, which allowed the Fed to lower interest rates paid to banks. E) quantitative easing, which allowed the Fed to buy private securities as well as government securities.
The figure above illustrates a linear demand curve. By comparing the price elasticity in the $2 to $4 price range with the elasticity in the $8 to $10 range, you can conclude that the elasticity is
A) greater in the $8 to $10 range. B) greater in the $2 to $4 range. C) the same in both price ranges. D) greater in the $8 to $10 range when the price rises but greater in the $2 to $4 range when the price falls.
Suppose that prices in Japan increase by 8 percent while prices in the United States remain stable. We would expect that the result would be that in the foreign exchange market ___________________________, ?ceteris paribus?
A) the dollar will appreciate and the yen will depreciate B) the dollar will depreciate and the yen will appreciate C) both the dollar and the yen will appreciate D) both the dollar and the yen will depreciate
In the 1960s, the monetarist school of thought held that
A) monetary and fiscal policy could explain most of the output fluctuations in U.S. history. B) there is a long-run tradeoff between inflation and unemployment. C) efforts to fine-tune the economy are likely to do more harm than good. D) all of the above E) none of the above