Suppose the supply of product X is perfectly inelastic. If there is an increase in the demand for this product, equilibrium price:
A. will decrease but equilibrium quantity will increase.
B. and quantity will both decrease.
C. will increase, but equilibrium quantity will decline.
D. will increase, but equilibrium quantity will be unchanged.
Answer: D
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A hard peg may be achieved by all of the following except
A) following the rules of the Bretton Woods Agreement. B) dollarization. C) establishing a currency board. D) mutual agreements establishing a common currency.
Ramsey pricing avoids cross subsidy
Indicate whether the statement is true or false
If the GDP deflator in 2011 was 130 compared to a value of 100 during the 2005 base year, this would indicate that
a. the inflation rate during 2011 was 30 percent. b. the general level of prices during 2011 was 30 percent higher than during 2005. c. the inflation rate during 2011 was 130 percent. d. nominal GDP grew by 30 percent during 2011. e. real GDP was 30 percent higher in 2011 than 2005.
If monetary policymakers fear a recession resulting from increased pessimism on the part of business people, and they want to avoid the recession, they would:
A. likely lower their target rate for inflation. B. shift the monetary policy reaction curve to the right. C. shift the monetary policy reaction curve to the left. D. encourage fiscal policymakers to act.