When demand is inelastic, an increase in price will cause
a. an increase in total revenue.
b. a decrease in total revenue.
c. no change in total revenue but an increase in quantity demanded.
d. no change in total revenue but a decrease in quantity demanded.
a
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According to the misperceptions theory of aggregate supply, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, then the firm would believe that the relative price of what it produce had
a. increased, so it would increase production. b. increased, so it would decrease production. c. decreased, so it would increase production. d. decreased, so it would decrease production.
Human capital refers to:
A. the skills and knowledge that enable a worker to be productive. B. the accumulated financial wealth of households. C. physical capital owned by households rather than businesses. D. machinery used by labor in production.
Mortgage-backed securities became a significant issue because I. housing prices fell across all regions. II. these securities were not as widely distributed as previously thought.
A. I only B. II only C. Both I and II D. Neither I nor II
How many interest rates were there in the IS-LM model in Chapter 5?
A) one B) two C) three D) zero