Jenna runs a small boutique in Capitola. She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more. On the basis of this information, what can you conclude about her price elasticity of demand for
wool hand warmers?
A) It is elastic.
B) It is perfectly elastic.
C) It is perfectly inelastic.
D) The price elasticity coefficient is 0.
Answer: B
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Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. D; C B. B; C C. B; A D. D; B
In a Lorenz diagram for income, the line of equality shows
A) the most equitable income distribution. B) how unequally incomes are distributed. C) how much redistribution occurs. D) the income distribution if everyone received the same income.
In 2005 real personal saving has decreased to ________ of personal disposable income
A) 3.5 B) 4.8 C) 11.2 D) 1.4
Assume that foreign capital flows into a nation rise due to expected increases in stock market appreciation. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and GDP Price Index in the context of the Three-Sector-Model? a. The real risk-free interest rate falls and GDP Price Index rises
b. The real risk-free interest rate falls and GDP Price Index falls. c. The real risk-free interest rate rises and GDP Price Index falls. d. The real risk-free interest rate and GDP Price Index remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.