Which of the following comparisons is true regarding price elasticity of demand?
A. The demand for monthly car payments is less elastic than the demand for a monthly gym membership because the car payments require a greater share of the consumer's income.
B. The demand for gasoline a year after a price change is less elastic than the demand for gasoline a week after a price change because consumers have had time to adjust.
C. The demand for water is less elastic than the demand for diamonds because water is a necessity but diamonds are a luxury.
D. The demand for cough syrup is less elastic than the demand for insulin because there are no close substitutes for insulin.
Answer: C
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One of the results of the strong economic growth in the United States relative to the rest of the world is a
A. U.S. trade surplus. B. U.S. trade deficit. C. growing U.S. net exports. D. trade deficit for U.S. trading partners.
Answer the following statements true (T) or false (F)
1) The "sticky price" model is the only one used by macroeconomists. 2) (Consider This) The term "economic investment" refers only to money spent purchasing newly created capital goods such as factories, tools, and warehouses. 3) (Consider This) If a farmer purchases 10 acres of farmland from a neighboring farmer, this would be considered an economic investment. 4) (Consider This) If Ford Motor Company purchases factory equipment previously used by General Motors, this would be considered an economic investment.
Refer to the information provided in Figure 27.2 below to answer the question(s) that follow.
Figure 27.2Refer to Figure 27.2. The tax multiplier is smallest (in absolute value) when the aggregate demand curve shifts from
A. AD1 to AD2. B. AD3 to AD4. C. AD5 to AD6. D. The output multiplier is the same for all AD curve shifts shown in the figure.
If the face value of a bond is $10,000,000, the coupon rate is 7%, and the inflation rate is 4%, then the annual coupon payment made to the holder of the bond is
A. $400,000. B. $700,000. C. $70,000. D. $300,000.