Price elasticity of demand basically measures
A) the reliability of a product.
B) the responsiveness of consumers to price changes.
C) the variability of price changes.
D) the percentage change in market price as a result of a change in demand.
Ans: B) the responsiveness of consumers to price changes.
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If the economy is on the IS curve, but is to the left of the LM curve, aggregate output will ________ and the interest rate will ________
A) rise; rise B) rise; fall C) fall; rise D) fall; fall
A ____________ exchange rate policy is where the central bank will intervene as needed in the market to keep the currency value from moving rapidly in one direction.
a. soft peg b. floating c. hard peg d. defined
Prices are useful in coordinating society's economic planning because
a. they convey information about which goods are scarce and which are plentiful. b. economies based on price systems are more flexible than centrally planned economies. c. economies based on price systems are more likely than centrally planned economies to minimize the cost of producing society's output. d. All of the above are correct.
What economic argument suggests that if transactions costs are sufficiently low, the post-bargaining equilibrium is economically efficient regardless of how property rights are distributed?
a. the Coase theorem b. the laws of supply and demand c. the law of comparative advantage d. the law of externalities