Refer to Figure 3-1. An increase in the price of a complement would be represented by a movement from
A) A to B. B) B to A. C) D1 to D2. D) D2 to D1.
D
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Marginal utility theory predicts that
A) when the price of a good rises, the quantity demanded of that good decreases. B) if the price of one good rises, the demand for a substitute good increases. C) if income increases, the demand for a normal good increases. D) All of the above answers are correct because all are predictions of marginal utility theory.
A congressman states, "If a government attempts to increase employment through increased government spending, all we will end up with is a higher price level." This congressman assumes that the
A) aggregate demand curve is a horizontal line. B) aggregate demand curve is a vertical line. C) aggregate supply curve is a horizontal line. D) aggregate supply curve is a vertical line.
The sale of U.S. currency and purchase of foreign currency by the Federal Reserve would shift the demand curve for U.S. dollars to the left
a. True b. False Indicate whether the statement is true or false
Suppose that quantity demand falls by 30% as a result of a 5% increase in price. The price elasticity of demand for this good is
a. inelastic and equal to 6. b. elastic and equal to 6. c. inelastic and equal to 0.17. d. elastic and equal to 0.17.