The cross elasticity of demand is calculated as the percentage change in the
A) quantity demanded of one good divided by the percentage change in the price of another good
B) price of one good divided by the percentage change in the quantity demanded of another good.
C) quantity demanded of one good divided by the percentage change in the quantity demanded of another good.
D) price of one good divided by the percentage change in the price of another good.
A
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
Positive externalities are created by people when they
A) add to the net real income of society. B) are altruistic or concerned for the welfare of others. C) benefit others without intending to do so. D) increase the general welfare. E) promote the happiness of others.
The prime interest rate is the
A) interest rate on six-month U.S. Treasury bills. B) discount rate. C) Federal funds rate. D) interest rate that banks charge high-quality borrowers.
You have the assignment of making a recommendation to the Chairman of the Fed during a period of persistent, high inflation. What could you do to restore stable prices? What would you recommend instead if the problem was persistent high unemployment?