If the demand for a good is perfectly inelastic, what will happen to the quantity demanded if there is a tiny increase in price?
a. quantity demanded will increase proportionately
b. quantity demanded will fall to zero
c. quantity demanded will decrease proportionately
d. quantity demanded will remain the same
d
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The total value of all final goods and services, measured in current market prices, produced in an economy during a year is
a. total domestic product b. gross domestic product c. real GDP d. gross value product e. total final product
Assume that you are a member of the U.S. House of Representatives from your home state and district. Which of the following best explains why you have a strong incentive to get the federal government to finance pork-barrel projects in your district?
a. Most of the benefits of pork-barrel projects within your district will accrue to your constituents, while most of the costs will be imposed on voters from other districts. b. Most of the costs of pork-barrel projects within your district will be imposed on your constituents, while most of the benefits will accrue to voters from other districts. c. Pork producers are a powerful political lobby that will influence the actions of legislators in all districts. d. This is a trick question; in a representative democracy, there is little incentive for legislators to support pork-barrel projects.
The substitution effect of a price change is depicted by a
a. movement along the budget constraint holding satisfaction constant. b. shift in the budget constraint at the old prices. c. movement along the consumer's new indifference curve at the new prices. d. movement along the original indifference curve to the point where the marginal rate of substitution equals the price ratio for the new set of prices.
Why does a bank sometimes hold excess reserves?
What will be an ideal response?