Assuming price elasticity of demand is reported as an absolute value, an elastic demand has an elasticity:
A. greater than one.
B. greater than zero and less than one.
C. exactly one.
D. less than one.
Answer: A
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The real rate of interest equals 8%, and the expected rate of inflation equals 2%. The nominal rate of interest is
A) 2%. B) 6%. C) 8%. D) 10%.
All of the following are deficit items in the balance of payments EXCEPT
A) purchases of foreign assets. B) imports of merchandise. C) foreign tourist expenditures. D) purchases of foreign currency.
Assume that an inflationary gap must be closed by reducing aggregate expenditures. If consumers refuse to cut spending on consumption and producers won't cut demand for investment goods, the President:
a. can do nothing. b. must build more roads. c. must borrow from Wall Street. d. must increase Social Security expenditures. e. must cut government spending.
Discuss some of the economic symbolism thought by many to be contained in L. Frank Baum's book The Wonderful Wizard of Oz