All else constant, there is an inverse relationship between the price elasticity of demand and the marginal revenue resulting from a decrease in price
Indicate whether the statement is true or false
FALSE
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
Refer to Table 9-11. If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many hats will Denmark gain compared to the "without trade" numbers?
A) -150 B) 0 C) 150 D) 1,050
Which of the following statements is true?
A) When TP = TE (total production = total expenditures), the economy is necessarily producing Natural Real GDP. B) When TP is greater than TE, inventory levels unexpectedly fall. C) When TE is greater than TP, inventory levels unexpectedly rise. D) b and c E) none of the above
Refer to the diagrams. The numbers in parentheses after the AD 1 , AD 2 , and AD 3 labels indicate the levels of investment spending associated with each curve. All figures are in billions. If aggregate demand is AD 3 and the monetary authorities desire to reduce it to AD 2 , they should:
A. increase the interest rate from 3 percent to 9 percent.
B. increase the money supply from $100 to $120.
C. decrease the money supply from $120 to $100.
D. decrease the interest rate from 3 percent to 9 percent.