If the price elasticity is between 0 and 1, demand is
A) elastic.
B) inelastic.
C) unit elastic.
D) perfectly elastic.
B
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The dynamic aggregate demand and aggregate supply model assumes that potential GDP increases over time
Indicate whether the statement is true or false
In the view of the Classical economists, a increase in aggregate demand leads to
A) lower output levels. B) a higher price level. C) higher output levels. D) a lower price level.
If the relative market price of producing cotton is more than the opportunity cost of producing it in the South,
(a) the market price of cotton will fall in the long run. (b) producers will increase the supply of cotton in the long run. (c) resources will flow away from the production of cotton, causing the supply of it to decline with the passage of time. (d) the situation will remain unchanged as long as supply and demand remain in balance.
Foreign exchange market intervention is most effective when:
a. each country's political leaders agree to cooperate fully with the process. b. leading economists in each country believe that intervention is needed. c. permanent differences between the free market exchange rate and the fixed exchange rate are expected. d. temporary differences between the free market exchange rate and the fixed exchange rate are expected. e. all the countries restrict the international movement of goods and services.