Which of the following is true about the combination of mops and brooms represented by point E in Figure 1.3 and using PP1?
A. Point E is attainable only if more resources become available or technological advances are made.
B. Point E is attainable if this economy uses more of its available resources.
C. Point E is unattainable if this economy becomes more efficient.
D. Point E is efficient now.
Answer: A
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If a 20 percent increase in the price of a used car results in a 10 percent decrease in the quantity of used cars demanded, then the demand for used cars is
A) elastic. B) inelastic. C) unit elastic. D) arc elastic.
The difference between the value you place on a product and its market price is called
a. Consumer surplus b. Quantity demanded c. Demand d. None of the above
The aggregate demand curve tells us the equilibrium level of real GDP corresponding to any price level
a. True b. False
An open market sale of bonds by the central bank will cause which of the following when a liquidity trap situation exists?
A) The interest rate will increase. B) The interest rate will not change. C) Output will decrease. D) The money supply, M, will not change. E) none of the above