Assuming the economy in the graph shown is currently at equilibrium A, we can conclude:
A. there must be unemployment of resources.
B. the economy is in a recession.
C. the economy is producing less than its potential level of output.
D. All of these are true.
Answer: D
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Investors are often willing to take the risks associated with investing in capital goods in developing nations because developing nations
A) insure a small return on investment. B) always insure the investments. C) have a large portion of the world's unutilized or underutilized resources and hence profit potential. D) get the International Monetary Fund (IMF) to back investments through a series of loan guarantees.
If the value of the price elasticity of demand is 0.2, this means that:
a. a 20 percent decrease in price causes a 1 percent increase in quantity demanded. b. a 0.2 percent decrease in price causes a 1 percent increase in quantity demanded. c. a 5 percent decrease in price causes a 1 percent increase in quantity demanded. d. a 0.2 percent decrease in price causes a 0.2 percent increase in quantity demanded. e. a 100 percent decrease in price causes a 200 percent increase in quantity demanded.
When the Fed increases the discount rate, it is more likely that the economy experiences _________ and the increase in the rate will _____________
a. recession; increase the federal funds rate as well b. recession; increase the cost to banks of borrowing from the Fed c. recession; decrease the cost to banks of borrowing from the Fed d. inflation; decrease the cost to banks of borrowing from the Fed e. inflation; increase the cost to banks of borrowing from the Fed
The number of cattle slaughtered every year for meat far exceeds the number of elephants slaughtered every year for their ivory. Despite this, cows can be found everywhere while elephants are on the verge of extinction in some countries. Which of the following best explains this difference?
a. Cows can be privately owned while in many countries elephants can not. b. The demand for ivory far exceeds the demand for beef. c. Animals slaughtered for their meat are generally better conserved by humans than animals slaughtered for nonfood uses. d. People tend to protest more every year to prevent cow extinction than they do for elephant extinction.