Explain what is meant by the term ceteris paribus. Why is this concept often used in economic models?
What will be an ideal response?
Ceteris paribus means "all else equal". When used in economic models, this concept helps us to simplify reality in order to focus on the relationships we are most interested in.
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We would expect the cross elasticity between tennis racquets and tennis balls to be:
a. negative. b. positive. c. zero. d. one. e. infinite.
Given a one-year Canadian bond with a yield of 8 percent, what will be the U.S. investor's rate of return at maturity if the Canadian dollar appreciates 10 percent against the U.S. dollar?
a. 2 percent b. 8 percent c. 10 percent d. 18 percent e. 25 percent
The demand for desserts tends to be more inelastic than the demand for red velvet cake
a. True b. False Indicate whether the statement is true or false
The best definition of GDP is
A. A physical measure of the capital stock of the economy. B. The sum of the physical amounts of goods and services in the economy. C. A dollar measure of final output produced during a given time period within a nation's borders. D. A measure of the per capita economic growth rate of the economy.