If the prices of substitutes for apples should rise and nothing else changes, then:
(a) The demand for apples will tend to increase.
(b) The supply of apples will almost certainly increase.
(c) The demand for apples will probably fall.
(d) The demand for, and supply of, apples will fall.
Answer: (a) The demand for apples will tend to increase.
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An owner of a local salon realized that by decreasing the prices that she charges for haircuts, her revenue has increased. This implies that
a. The demand for her haircuts is elastic b. The demand for her haircuts is inelastic c. The demand for her haircuts is unitary elastic d. The demand for her haircuts is perfectly inelastic
Which of the following is true about the market equilibrium? a. As the price increases, the quantity demanded and the quantity supplied increases. b. As the price increases, the quantity demanded and the quantity supplied decreases. c. As the price increases, the quantity demanded increases and the quantity supplied decreases
d. As the price increases, the quantity demanded decreases and the quantity supplied increases. e. As the price increases, neither the quantity demanded nor quantity supplied change.
Y = C + I + G + NX is an identity because
a. each symbol identifies a macroeconomic variable. b. the right-hand and left-hand sides are equal when an equilibrium is reached. c. the equality holds due to the way the variables are defined. d. None of the above is correct.
Automatic stabilizers are government programs that:
A. exaggerate the ups and downs in aggregate demand without legislative action. B. bring expenditures and revenues automatically into balance without legislative action. C. shift the budget toward a deficit when the economy slows but shift it toward a surplus during an expansion. D. increase tax collections automatically during a recession.