There are three goods you are interested in purchasing, X, Y and Z. You notice that the price of Z has fallen. Given that the cross price elasticity between Z and Y is ?1.5; the cross price elasticity between Y and X is 3.0, and the cross price elasticity between Z and X is 0.50. It would make sense that:
A. Z and X are complements; Y and X are substitutes.
B. Y and X are substitutes; Y is complementary to Z.
C. X and Z are unrelated; Y is complementary to X.
D. X and Z are complements; Y and Z are substitutes.
Answer: B
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If a bank's total assets are $150 million and total liabilities are $110 million, the bank's net worth is
a. $15 million b. $260 million c. $40 million d. -$40 million e. $5 million
Due to the multiplier effect, a decrease in investment spending
a. is greater than the resulting decrease in GDP b. has a minimal impact on the economy c. causes the money supply to increase d. leads to an even larger decrease in output e. results in increased autonomous consumption
To approximate the percentage change in real income over any period of time,
a. we need to subtract the percentage change in nominal income from the inflation rate b. we need to subtract the rate of inflation from the percentage change in nominal income c. we need to divide the percentage change in nominal income by the inflation rate d. we need to multiply the change in income by the inflation rate e. we need to multiply the nominal percentage change in income by the percentage change in inflation rate
Economic theory predicted that the price of a depletable resource would rise by 10 percent. In reality, the price fell by 5 percent. Which of the following events could explain this discrepancy?
a. Known reserves of the resource were depleted. b. The interest rate rose by 15 percent. c. Antitrust enforcement broke up a cartel among major suppliers of the resource. d. The government imposed an effective price floor.