The aggregate expenditure line, along with the 45-degree line, determines equilibrium. This model is based on the assumption that
What will be an ideal response?
producers are ready to supply whatever amount of output is demanded at the existing price level
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Rank the following goods from most elastic to least elastic: fruit, apples, Granny Smith apples
A) Fruit, apples, Granny Smith apples B) Apples, Granny Smith apples, fruit C) Granny Smith apples, apples, fruit D) The goods cannot be ranked by elasticity because it ultimately involves the problem of comparing apples to oranges.
Given that the own-price elasticity of demand for shoes is -2.6, if the price of shoes rises by 8%, what will happen to the quantity of shoes demanded?
a. It will decrease by 20.8% b. It will increase by 20.8% c. It will decrease by 2.6% d. It will decrease by 2.6%
Which of the following is most likely to close a recessionary gap in the economy?
a. A decrease in the expenditure on infrastructure b. An increase in the income tax rate c. An increase in the rate of foreign exchange d. A decrease in money supply e. An increase in the compensation for government employees
Taxing the market for alcohol at the same rate as the market for juice will likely:
A. raise more revenue. B. cause more inefficiency. C. cause a very big reaction in terms of decreased quantity demanded. D. produce very similar results in terms of revenue and inefficiency because the rate is the same.