If the price elasticity of demand is -0.8 and the firm increases price, revenue will
a. Increase
b. Decrease
c. Stay constant
d. become zero, they would lose all their customers
a
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According to this Application, one strategy proposed to deal with the rising expenses of government entitlement programs is for the government to save and invest now so as to reduce the burden on future generations. This strategy would
A) not change GDP, but shrink entitlement programs. B) increase GDP and eliminate entitlement programs. C) increase GDP, and entitlement programs would increase along with GDP. D) increase GDP and entitlement programs would decrease.
If the Phillips curve represents a "structural relationship," then
A) the Phillips curve will be vertical in the long run. B) the trade-off between unemployment and inflation is permanent. C) the trade-off between unemployment and inflation holds only for the short run. D) the trade-off between unemployment and inflation holds in the long run, but not in the short run.
Refer to Figure 13-8. At the profit-maximizing output level the firm will
A) earn a profit of $60. B) break even. C) earn a profit of $176. D) earn a profit of $88.
Which of the following is a contractionary fiscal policy that decreases the level of aggregate demand?
a. reduced business taxes b. reduced government spending c. reduced payroll taxes d. reduced personal income taxes