The price of pens increases from $2 to $2.20. At the same time, the quantity of pens demanded decreases from 100 to 90. Demand for pens is:
A. perfectly inelastic.
B. inelastic.
C. unit elastic.
D. elastic.
Answer: C
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In the above figure, using the slope across an arc, the slope of the curve between points a and c is
A) 3/5. B) 5/3. C) -3/5. D) -5/3.
In a closed economy, private saving, , is equal to
A) I - (G - T). B) I + (G - T). C) I + (G + T). D) I - (G + T). E) I + (G - T) + C.
Data on the relationship between the U.S. multilateral real exchange rate and the U.S. trade balance shows:
a. a surprising result that the decrease in the trade balance is correlated with an increase (depreciation) of the U.S. dollar multilateral real exchange rate. b. a predictable result that the increase in the trade balance is correlated with an increase (depreciation) of the U.S. dollar multilateral real exchange rate. c. a correlation that is so weak it cannot be used to support the theory that the trade balance is related to the real effective exchange rate of the U.S. dollar. d. a surprising result that the increase in the U.S. trade balance occurs with a decrease (appreciation) in the real effective exchange rate of the dollar.
A manager in an investment center is offered a potential investment that would have an ROA of 15 percent. After the investment, it would make up 20 percent of his total portfolio. Currently, he makes 20 percent on his portfolio, though the company requires only 12 percent. Which of the following is true?
A. He will not make the investment because the company prefers 12 percent. B. He will make the investment because a larger portfolio is always better than a smaller portfolio. C. He will not make the investment because it lowers his overall return to 19 percent. D. He will make the investment since it is 3 percent greater than the company's required return.