If the price of gasoline has increased from $2 per gallon to $4 per gallon at the same time that the overall price index increased from 200 to 250, then you know that the inflation adjusted price of gasoline has
A. decreased.
B. increased.
C. remained constant.
Answer: A
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Elasticity
A. deals with percentage changes in price and quantity demanded. B. employs percentage changes calculated in terms of average values of the prices and quantities at issue. C. is generally stated in absolute value. D. All of the responses are correct.
If the expected path of 1-year interest rates over the next five years is 2 percent, 4 percent, 1 percent, 4 percent, and 3 percent, the expectations theory predicts that the bond with the lowest interest rate today is the one with a maturity of
A) one year. B) two years. C) three years. D) four years.
Many economists and policymakers have raised concerns about crowd funding due to the existence of:
A) information costs facing small investors B) information costs facing business start ups C) transaction costs facing business start ups D) increased competition for banks in funding business start ups
In the life-cycle hypothesis, people are assumed to have a consumption pattern that leads them to save
A) at no point in their life. B) in the working years up to retirement. C) in their retirement years. D) in every year of their life.