The price elasticity of demand measures the responsiveness of:
A. firms to changes in demand.
B. demand to a change in price of a substitute good.
C. demand to a change in price.
D. quantity demanded to a change in price.
Answer: D
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Milton Friedman's assertion that "inflation is a monetary phenomenon" is based on:
A. the assumption of constant nominal GDP growth. B. the assumption that the price level grows at the same rate as real GDP. C. the quantity theory of money. D. the assumption that the central bank increases the money supply by a constant rate every year.
In many large retail stores, price markdowns are now determined by computer. The "middle managers" who used to make these decisions personally became __________ unemployed
A) frictionally B) structurally C) naturally D) cyclically
According to the political business cycle theory, if the Fed wanted to see a President re-elected, prior to the election it might
a. buy bonds to raise interest rates. b. buy bonds to reduce interest rates. c. sell bonds to raise interest rates. d. sell bonds to reduce interest rates.
Explain the two types of market failure and given an example of each one
Please provide the best answer for the statement.