The demand for a good is inelastic. Which of the following would be the most likely explanation for this?
A. The good is narrowly defined.
B. The time interval considered is long.
C. The good is broadly defined.
D. The good costs a large portion of one's total income.
Answer: C
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A purchase of government bonds from the public by the Federal Reserve Banks
A) adds to the money stock. B) has the effect of pulling wealth and therefore money out of the private sector. C) increases the money stock directly and simultaneously increases commercial bank reserves. D) puts additional reserves into the commercial banking system. E) reduces the wealth of the public.
If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is
A) 60 units. B) 54 units. C) 48 units. D) 5 units.
In the distributed lag model, the dynamic causal effect
A) is the sequence of coefficients on the current and lagged values of X. B) is not the same as the dynamic multiplier. C) is generated by choosing different truncation points for the HAC standard errors. D) requires estimation of the model by Cochrane-Orcutt method.
If MPC = 0.80, how much should government spending change to increase real GDP by $500?
a. ?100. b. +80. c. ?80. d. +500. e. +100.