When two goods are substitutes for each other, the cross price elasticity of demand
A. may be either positive or negative.
B. will be zero.
C. will be positive.
D. will be negative.
Answer: C
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Use the following table to answer the next question.Current AccountFinancial AccountCapital Account-$753,438 $30,696This country has a ________.
A. trade deficit B. deficit in the financial account C. trade surplus D. deficit in the capital account
If the government increases spending and there is a complete direct expenditure offset, then
A) aggregate demand and real Gross Domestic Product (GDP) will not change. B) aggregate demand and real Gross Domestic Product (GDP) will increase by the amount of the spending increase. C) the price level will drop. D) the government spending multiplier will be greater than zero.
Assume Bridget's budget constraint is shown in the graph shown. If she has $48 to spend on these two items, then earrings must cost:
A. $8.
B. $6.
C. $4.
D. $12.
The suggestion that the Fed concentrate only on reducing inflation is an attempt to
a. stabilize the level of unemployment and inflation. b. shift the long-run Phillips curve to the right. c. improve the efficiency of the self-correcting mechanism. d. simplify demand management by focusing on only one goal.