Demand is elastic if
A) consumers respond strongly to changes in the product's price.
B) a large percentage change in price brings about a small percentage change in quantity demanded.
C) a small percentage change in price brings about a small percentage change in quantity demanded.
D) the quantity demanded is not responsive to price changes.
E) the demand curve is vertical.
A
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Ways to ration goods include
A) first-come, first-served. B) political power. C) prices. D) all of the above.
The theory of liquidity preference is most helpful in understanding
a. the wealth effect. b. the exchange-rate effect. c. the interest-rate effect. d. misperceptions theory.
Between 1960 and 2010 our gross savings rate
A. rose about one third. B. stayed about the same. C. declined by about 50%. D. declined by about 20%.
There are limits to the ability of monetary authorities to use sterilized intervention in the case of a deficit because
A. the central bank's ability to constantly obtain foreign currency for the sterilized intervention is constrained. B. the pressure from foreign countries to allow the domestic currency to appreciate will lead to large losses. C. the export level is fixed and it cannot be allowed to drop. D. the central bank may be unwilling to increase its holdings of foreign currency beyond a certain limit.