A 2 percent increase in the price of rice leads to a 2 percent decrease in the quantity demanded of rice. The absolute price elasticity of demand is
A) 3.
B) 1.
C) 0.1.
D) 6.
Answer: B
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
The fixed exchange rate system set up in the 1940s was the
A) purchasing power parity exchange system. B) gold standard. C) Bretton Woods system. D) European Union euro system.
Economic studies have shown that countries that have high inflation rates have lower rates of economic growth than do countries with low inflation rates. Explain what underlies this relationship between inflation and economic growth
What will be an ideal response?
According to the ________ explanation of unemployment, workers will be willing to accept wage cuts only if they know that workers in other firms and industries are receiving similar cuts.
A. minimum-wage B. relative-wage C. living-wage D. nominal-wage