Define price elasticity of demand. What does it measure?
What will be an ideal response?
Price elasticity of demand is the ratio of the percentage change in quantity demanded to the percentage change in price. It measures the responsiveness of quantity demanded to changes in price.
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Compare the views of Keynesian and mainstream economists on the effects fiscal stimulus has on real GDP and employment
What will be an ideal response?
A profit-maximizing firm in a monopolistically competitive market charges a price equal to marginal cost
a. True b. False Indicate whether the statement is true or false
Calculate the user cost of capital of a machine that costs $100,000 and depreciates at a rate of 25%, when the nominal interest rate is 4% and the expected inflation rate is 1%.
A. $29,000 B. $28,000 C. $25,000 D. $3000