Use the figure above to answer this question. At a price level of 110
A) real GDP is greater than the aggregate quantity demanded and firms will cut production.
B) real GDP is less than the aggregate quantity demanded and firms will increase production.
C) inventories will decrease.
D) real GDP less than the aggregate quantity demanded and firms will increase prices.
A
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You are an economist for the City Subway Commission. Presently, the price of a subway ride is 80¢, and 200,000 seats are filled weekly. The price elasticity of demand for subway rides is -0.40, and the income elasticity of demand is -0.60.
(i) The Commission wants to ensure that the subway has enough excess capacity to handle any extra demand that might occur during an economic decline. If a recession lowered area incomes by 5%, how many additional seats per week would the subway need? (ii) The Commission has just approved a subway price increase of 10¢ per ride. The Commission wants to know if it can use the opportunity to retire two aging subway cars that each provide 8,000 seats weekly. When the price hike goes into effect, can neither, one, or both cars be retired?
The figure above shows Sam's budget line. The vertical intercept of Sam's budget line is equal to
A) the quantity of coffee purchased if zero gasoline is purchased. B) Pc/Y. C) the quantity of gasoline purchased if zero coffee is purchased. D) Pg/Y.
The total value of all outstanding federal government securities is
A) a flow variable. B) the budget deficit. C) total personal wealth. D) none of the above.
When quantity supplied equals quantity demanded, there is:
a. disequilibrium b. excess quantity supplied. c. a market-clearing price (equilibrium price). d. excess quantity demanded. e. a shortage.