If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in price will increase quantity demanded by:
A. 20 percent
B. 0.5 percent
C. 5 percent
D. 0.05 percent
C. 5 percent
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The risk of crowding out is greater the closer the economy is to full employment.
Answer the following statement true (T) or false (F)
The assumption that nothing changes EXCEPT the variables being studied is
A. normative economic analysis. B. the rationality assumption. C. positive economic analysis. D. the ceteris paribus assumption.
After a particular loan has been paid off, neither the borrower nor the lender has lost purchasing power. Therefore, it must be true that actual inflation was
a. greater than expected inflation. b. equal to expected inflation. c. less than expected inflation. d. greater than the nominal rate of interest.
When a tax on a good is enacted,
a. buyers and sellers share the burden of the tax regardless of whether the tax is levied on buyers or on sellers. b. buyers always bear the full burden of the tax. c. sellers always bear the full burden of the tax. d. sellers bear the full burden of the tax if the tax is levied on them; buyers bear the full burden of the tax if the tax is levied on them.