A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock.
B. long-run demand shock.
C. long-run supply shock.
D. short-run demand shock.
Answer: A
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If demand is unit elastic, then a 10 percent increase in the price will lead to a 10 percent increase in quantity demanded.
Answer the following statement true (T) or false (F)
A "war on drugs" is waged, and, as a result, a larger quantity of drugs flowing into the United States is seized and more drug traffickers are arrested. If demand for drugs is inelastic, one would expect the total expenditure on drugs to: a. decrease
b. increase. c. stay constant. d. There is not enough information available to make a determination.
Refer to Figure 5.7. Which diagram best represents an income-consumption curve where bread is an inferior good?
A. A
B. B
C. C
D. D
Defining what money is:
A. is easier to do in the long run than in the short run. B. is the easiest, but least important part of monetary policy. C. is easy to do, which explains why monetary policy is so effective. D. isn't easy, and this makes monetary policy more difficult.