If the price elasticity of demand (Ep) equals one in the short run, then, other things being equal, in the long run Ep will be
A) one.
B) less than one.
C) greater than one.
D) indeterminate without more information.
Answer: C
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One of the problems with excessive debt is that
A) it worsens the central government's budget position by adding large debt service payments to other budget items. B) it reduces the quantity of resources available to invest in economic development. C) if debt service is substantial, schools, health clinics, roads, ports, other infrastructure, and social needs are less likely to be addressed. D) it can intensify and spread a crisis. E) All of the above.
Private contracts between parties with mutual interests
a. will reduce the well-being of society. b. will lead to market outcomes in which the public interest is sacrificed for personal gain. c. can solve some inefficiencies associated with positive externalities. d. will create negative externalities.
A bank is able to make new loans equal to:
A. legal reserves of the bank B. required reserves of the bank C. total reserves of the bank D. excess reserves of the bank
The critical elements of nondiscretionary fiscal policy are
A. tax policy and spending policy. B. interest rates and tax rates. C. interest rates and the money supply. D. a progressive income tax and a welfare state.