Deflation is defined as a situation in which
A. the value of the dollar is rising relative to other currencies.
B. the rate of inflation is below 2 percent.
C. the Gross Domestic Product's growth rate is less for a given quarter than it was for the prior quarter.
D. the average of all prices of goods and services in an economy is falling.
Answer: D
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Kisa consumes the same amount of cigarettes each week regardless of her income (assume that her income is sufficiently large such that the quantity is affordable). The Equivalent Variation equals the Compensating Variation
Indicate whether the statement is true or false
Absolute price elasticities are calculated for four commodities, and the values are: 0.009; 1.0; 3.3; and 4.1. Which indicates the most price-responsive situation?
A) 0.009 B) 1.0 C) 3.3 D) 4.1
If the price of a DVD decreases by 50 percent, the quantity demanded increases by 75 percent. The price elasticity of demand is:
A. –1.5 and is inelastic. B. –1.5 and is elastic. C. –0.67 and is elastic. D. –0.67 and is inelastic.
At the equilibrium price, the quantity of the good that buyers are willing and able to buy
a. is greater than the quantity that sellers are willing and able to sell. b. exactly equals the quantity that sellers are willing and able to sell. c. is less than the quantity that sellers are willing and able to sell. d. Either a) or c) could be correct.