Suppose that if the price of plane tickets increased, more people would choose to travel by train. If this happened, you would know that:
A. plane tickets and train tickets are complements.
B. plane tickets are an inferior good.
C. the cross-price elasticity between plane tickets and train tickets is negative.
D. the cross-price elasticity between plane tickets and train tickets is positive.
Answer: D. the cross-price elasticity between plane tickets and train tickets is positive.
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Suppose that there is no government and no international trade. When C + I is less than the level of real GDP
A) unplanned inventories increase, and real GDP contracts. B) unplanned inventories decrease, and real GDP expands. C) real planned investment spending equals real planned saving. D) unplanned inventories equal zero, and there is no change in the level of real GDP.
Which of the following could decrease unemployment and inflation simultaneously?
A) a decrease in oil prices B) contractionary monetary policy C) an increase in the real wage D) expansionary monetary policy
How can improvements in health increase a country's total income?
What will be an ideal response?
To prevent obesity, the government may establish a tax on high caloric foods, such as twinkies. A twinkie tax will have the smallest impact on quantity demanded when the demand curve for twinkies is
A) perfectly elastic. B) perfectly inelastic. C) more elastic than the supply curve. D) both A and B.