A positive cross price elasticity of demand between two goods suggests that the goods are
A) not related.
B) complements.
C) substitutes.
D) both of unitary elasticity.
C
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Refer to Scenario 17.4. Moral hazard would be eliminated in this situation if
A) the insurer would always charge $5000. B) the insurer would always charge $10,000. C) the insurer could costlessly monitor whether a flood control system is in place, and adjust the premium upward if it is not. D) the insurer could costlessly monitor whether a flood control system is in place, and adjust the premium downward if it is not. E) the flood did not occur.
According to the crowding-out effect, a budget deficit will lead to:
a. reduced investment spending and a reduction in long-term economic growth. b. reduced investment spending and an increase in long-term economic growth. c. increased investment spending and a reduction in long-term economic growth. d. increased investment spending and an increase in long-term economic growth.
Which statement about the U.S. poverty line is true?
a. The poverty line is adjusted for the value of food aid. b. The poverty line is based on cash income. c. The poverty line varies from state to state. d. The poverty line fluctuates with Medicaid claims.
The largest component of gross domestic product is:
a. consumption expenditure. b. investment expenditure. c. government spending. d. international spending.