The greater is the absolute price elasticity of demand, the
A) larger is the responsiveness of quantity demanded to the price change.
B) smaller is the responsiveness to a price change.
C) larger is the income of the buyer.
D) higher is the change in demand to an income change.
Answer: A) larger is the responsiveness of quantity demanded to the price change.
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If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run, the economy would experience
A) an increase in the natural rate of unemployment. B) stagflation. C) long-run economic decline. D) hyperinflation.
When the price ceiling on eggs is lifted, there is a shortage of eggs in the market
a. True b. False Indicate whether the statement is true or false
Expenditures that are directly included in GDP accounts include
a. the value of housework done by householders b. the selling of illegal drugs c. playing tennis with friends on a Sunday afternoon d. casual labor in sweatshops that is unreported e. going to a Dodgers-Expos game on your day off
To fight inflation, the government may
a. decrease aggregate demand, which will also lead to lower unemployment rates. b. increase aggregate demand, which will also lead to lower unemployment rates. c. increase aggregate demand, which will also lead to higher unemployment rates. d. decrease aggregate demand, which will also lead to higher unemployment rates.