For a rational consumer, the income elasticity of demand for common salt is:
a. greater than one.
b. smaller than one.
c. equal to one
d. equal to zero.
d
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The short-run and long-run aggregate supply curves remain stable, and a decrease in aggregate demand occurs. What is the result in the short run?
A) A period of recession and a rise in the unemployment rate could occur. B) A period of expansion and a rise in the unemployment rate could occur. C) An increase in the price level and real GDP will occur. D) The price level will fall but real GDP will remain the same.
If a firm decides to stop its sales agents from pricing too aggressively to make sales by requiring the agent to obtain permission to reduce price below a specific threshold, and the manager has all the relevant information transferred to him by the firm, the solution would
a. Work b. Not work c. Not work in all circumstances d. None of the above
The most efficient way to get firms to reduce pollution is to
A) set uniform emission standards and require all firms to meet the standards. B) make the worst polluters shut down and go out of business. C) make them pay for the social costs of production and let them decide how to respond to the higher costs. D) provide firms and consumers with the information about the effects of their actions and encourage them to behave responsibly.
A reduction in a country's rate of inflation should
A. increase its exports. B. lead to a negative trade balance. C. increase its imports. D. lead to an outflow of SDRs.