Suppose the value of the price elasticity of demand is -3. What does this mean?
A) A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent.
B) A $1 increase in price causes quantity demanded to fall by 3 units.
C) A 1 percent increase in the price of the good causes quantity demanded to increase by 3 percent.
D) A 3 percent increase in the price of the good causes quantity demanded to decrease by 1 percent.
A
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The CPI bias was estimated by the Congressional Advisory Commission on the Consumer Price Index as
A) understating the actual inflation rate by about 5 percentage points a year. B) understating the actual inflation rate by more than 5 percentage points a year. C) overstating the actual inflation rate by about 1 percentage point a year. D) overstating the actual inflation rate by more than 5 percentage points a year. E) understating the actual inflation rate by about 1 percentage point a year.
In the early post-war years, the Fed was reluctant to continue its wartime agreement with the Treasury because it believed the result would be
A) recession. B) inflation. C) higher taxes. D) lower taxes.
Explain why people might work less if the wage increases.
What will be an ideal response?
According to the Phillips curve
A. there is a direct relationship between price-level changes and the level of unemployment rate. B. price-level changes are not affected by changes in the unemployment rate. C. the unemployment rate is not affected by changes in the price level. D. there is an inverse relationship between price-level changes and the unemployment rate.