If quantity demanded for rice decreases by 4% when the price of rice increases by 8%, we know that the price elasticity of rice is equal to:
a. -2.5
b. -0.5
c. -2.0
d. -0.4
Answer: -0.5
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Suppose a firm has an investment project which will cost $200,000 and result in $30,000 profit. The firm will not undertake the project if the interest rate is
A) greater than 15 percent. B) greater than 10 percent. C) greater than 5 percent. D) positive.
The basic difference between macroeconomics and microeconomics is that:
A. microeconomics looks at the forest (aggregate markets) while macroeconomics looks at the trees (individual markets). B. macroeconomics is concerned with groups of individuals while microeconomics is concerned with single countries. C. microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets). D. macroeconomics is concerned with generalization while microeconomics is concerned with specialization.
The classical long-run aggregate supply curve is
A. vertical at a level of output below potential real GDP. B. upward sloping. C. upward sloping at the level of potential real GDP. D. vertical at a level of potential real GDP.
The IMF offers loans to developing countries in times of balance of payment constraints, but the IMF also faces strong criticisms because:
A. contractionary fiscal policy and expansionary monetary policy tend to be ineffective against balance of payment constraints. B. contractionary fiscal and monetary policies are always undesirable for any developing country. C. it employs economists that know little about developing countries and their economic affairs. D. the conditions tend to be procyclical, therefore worsening the recessions.