The price elasticity of demand for leisure air travel is 1.60. Therefore, a
A. 10 percent decrease in the price of leisure air travel will cause a 16 percent decrease in the amount of leisure air travel.
B. 10 percent decrease in the price of leisure air travel will cause a 16 percent increase in the amount of leisure air travel.
C. 16 percent decrease in the price of leisure air travel will cause a 10 percent increase in the amount of leisure air travel.
D. a 16 percent decrease in the price of leisure air travel will cause a 10 percent decrease in the amount of leisure air travel.
B. 10 percent decrease in the price of leisure air travel will cause a 16 percent increase in the amount of leisure air travel.
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Refer to Figure 3-6. The figure above represents the market for coffee grinders. Assume that the market price is $21. Which of the following statement is true?
A) There is a shortage that will cause the price to increase; quantity demanded will then decrease and quantity supplied will increase until the price equals $25. B) There is a shortage that will cause the price to increase; quantity supplied will then decrease and quantity demanded will increase until the price equals $25. C) There is a shortage that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25. D) There will be a shortage that will cause the price to increase; demand will then decrease and supply will increase until the price equals $25.
If Jennifer withdraws $750 from her savings account and deposits it in her checking account, then M1 will ________ and M2 will ________
A) increase; increase B) increase; decrease C) increase; not change D) not change; decrease
The Fed's mostly used tool for changing the size of the money supply is
A. its power to change the discount rate. B. its power to change legal minimum reserve requirements. C. open market operations. D. changing the size of the government budget deficit.
Raising taxes as an element of discretionary fiscal policy is intended to reduce aggregate demand, but it can also reduce aggregate supply if
a. the higher taxes lead workers to seek out a second job. b. the higher taxes cause workers to work less. c. the government purchases goods with the additional revenue. d. the government uses the additional revenue to retire some of the federal debt. e. the higher taxes cause people to save less.