Suppose European incomes increase by 4 percent per year, and as a result, U.S. exports of farm goods to Europe rise by less than 4 percent annually. The elasticity that can be computed from this information is the
A. Price elasticity of supply.
B. Income elasticity of demand for U.S. farm exports.
C. Cross-price elasticity of demand for income with respect to U.S. farm goods.
D. Price elasticity of demand.
Answer: B
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Suppose the marginal product of labor in the economy is given by MPN = 200 - 0.5 N, while the supply of labor is 100 + 4w
(a) Find the market-clearing real wage rate. (b) What happens if the government imposes a minimum wage of 40? Is there involuntary unemployment? (c) What happens if the government imposes a minimum wage of 60? Is there involuntary unemployment?
The Federal Reserve uses two definitions of the money supply, M1 and M2, because
A. M2 satisfies the medium of exchange function of money, whereas M1 satisfies the store of value function B. M2 is a narrow definition focusing more on Liquidy, whereas M1 is a broader definition of the money supply C. M1 is a narrow definition focusing more on liquidy, whereas M2 is a broader definition of the money supply
There will be a surplus of a product when:
A. price is below the equilibrium level. B. the supply curve is downward sloping and the demand curve is upward sloping. C. the demand and supply curves fail to intersect. D. consumers want to buy less than producers offer for sale.
Empirical evidence across numerous countries indicates that changes in the ________ are associated with nearly equiproportional changes in ________.
A. price level, money supply B. money supply, price level C. money supply, real Gross Domestic Product (GDP) per year D. real Gross Domestic Product (GDP) per year, income velocity of money