Which of the following statements is true?
A. The effect of a compensated price change = the substitution effect of the price change + the income effect of the price change.
B. The effect of an uncompensated price change = the substitution effect of the price change - the income effect of the price change.
C. The effect of an uncompensated price change = the income effect of the price change - the substitution effect of the price change.
D. The effect of an uncompensated price change = the substitution effect of the price change + the income effect of the price change.
D. The effect of an uncompensated price change = the substitution effect of the price change + the income effect of the price change.
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Which of the following pairs of goods would most likely exhibit a cross price elasticity of 2.2?
a. hamburgers and fries b. peanut butter and jelly c. butter and margarine d. tennis balls and tennis rackets
What will happen if a country uses money creation to finance a large and expanding national debt?
a. Real output and employment will grow rapidly. b. Nominal interest rates will fall. c. The foreign exchange value of the currency will increase. d. The rate of inflation will rise.
Which of the following is the most accurate statement?
a. Trade policy has neither microeconomic nor macroeconomic effects. b. Trade policy has similar microeconomic and macroeconomic effects. c. The effects of trade policy are more macroeconomic than microeconomic. d. The effects of trade policy are more microeconomic than macroeconomic.
If a hurricane were to wipe out the majority of the eastern seaboard in the United States, it would likely cause a:
A. short-run supply shock. B. long-run supply shock. C. long-run demand shock. D. short-run demand shock.