If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of the good, demand is said to be
a. horizontal.
b. relatively inelastic.
c. relatively elastic.
d. income proof.
B
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Complementary goods are goods
a. that are consumed jointly b. that are consumed one in place of the other c. for which demand increases when the price of its complementary goods increases d. for which demand decreases when the price of its complementary goods decreases e. that are inversely related
When the government decides to add a fighter aircraft to national security, it
a. builds it in its own defense factories b. commandeers the resources (labor, capital) and uses them to build the plane c. must go to the Fed for the money to buy the aircraft since the Fed is the agency that creates money d. taxes its people and pays an aircraft company to make a plane e. taxes Boeing to produce the Boeing aircraft
More detailed financial instruments tend to be:
A. more costly because it will cost more to create. B. less costly because they can be standardized more easily. C. more desirable than less detailed ones, no matter what the price. D. less costly because all possible contingencies are covered.