Suppose the demand for bananas increases. Explain how the price of bananas adjusts after the increase in demand
What will be an ideal response?
If the demand for bananas rises, a shortage is created at the original equilibrium price. This means there will be upward pressure on price. As price rises, quantity demanded falls and quantity supplied increases until the two are equal.
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Which of the following can explain faster growth of real GDP in country A than in Country B?
a. both greater population growth and greater productivity growth in Country A b. greater population growth in Country A, but not greater productivity growth in Country A c. greater productivity growth in Country A, but not greater population growth in Country A d. neither greater population growth nor greater productivity growth in Country A
How do economists compute the price elasticity of demand?
a) the percentage change in the price divided by the percentage change in quantity demanded b) the percentage change in income divided by the percentage change in the quantity demanded c) the percentage change in the quantity demanded divided by the percentage change in price d) the percentage change in the quantity demanded divided by the percentage change in income
The international financial market moved towards equilibrium under the gold standard due to
A) shifts in exchange rates caused by changes in supply and demand for foreign exchange. B) changes in interest rates. C) negotiations among central banks. D) flows of gold among countries.
The inflation rate is
A. the percentage increase in the price index from one year to the next as well as the price index in one year minus the price index in the previous year. B. the price index in one year minus the price index in the previous year. C. the percentage increase in the price index from one year to the next. D. the percentage increase in the price index from the base year.