The demand for a new effective drug for the cure of AIDS would most likely be
A. elastic.
B. unit elastic.
C. perfectly elastic.
D. highly inelastic.
Answer: D
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
If the quantity of money demanded exceeds the quantity of money supplied, then
A) the quantity of nonmonetary assets demanded exceeds the quantity supplied. B) the quantity of nonmonetary assets supplied exceeds the quantity demanded. C) the quantity of nonmonetary assets demanded will still equal the quantity supplied, all else being equal. D) you can make no conclusions about the relative supply and demand of nonmonetary assets.
Which of the following are not subsets of the ability-to-pay principle?
a. horizontal equity b. vertical equity c. diagonal equity d. beneficial equity
Which of the following would NOT be a short-run decision for the firm?
A) Recall workers who were previously laid-off. B) Have labor work two hours overtime each day in order to expand output C) Build another wing on the plant in order to add a new assembly line. D) Place an order with a supplier for additional raw materials.