In a business cycle, the period between the high point of economic activity and the following low point is called
A. an expansion
B. inflation
C. stagflation
D. a recession
Answer: D. a recession
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Less money means ________ interest rates, which ________ spending
A) lower; stimulates B) lower; reduces C) higher; stimulates D) higher; reduces
What is the price elasticity of demand for a vertical demand curve?
a. Inelastic, but not perfectly inelastic b. Perfectly elastic c. Unitary elastic d. Perfectly inelastic e. Elastic, but not perfectly elastic
If the government imposes an excise tax on gasoline equal to $0.25 per gallon and the demand curve for gasoline is downward-sloping, the supply of gasoline will:
A. shift upward and the price will increase by $0.25 per gallon. B. shift upward and the price will increase by less than $0.25 per gallon. C. shift downward and the price will decrease by less than $0.25 per gallon. D. shift downward and the price will decrease by $0.25 per gallon.
The Net Present Value approach to investment results in an investment being undertaken only if
A) its net present value is positive. B) its net present value is zero. C) it has positive cash flow. D) its internal rate of return equals the rate of interest.