The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending.
B. recessionary gaps.
C. expansionary gaps.
D. unemployment.
Answer: B
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A vertical demand curve has an elasticity of demand equal to zero.
Answer the following statement true (T) or false (F)
A recent study on enrollment at a liberal arts college concluded that demand elasticity is 0.91. The administration is considering a tuition increase to help balance the budget. The revenue-maximizing decision is to
A. decrease tuition, which should boost enrollment enough to balance the budget. B. decrease tuition, which would bring in more revenue. C. leave tuition as is—an increase would not help balance the budget. D. increase tuition, which would bring in more revenue.
An example of a perfectly competitive market would be the market for
a. electricity. b. soybeans. c. coffee shops. d. restaurants.
When exchange rates are fixed, a temporary expansion in the money supply will:
A) increase output. B) leave output unchanged. C) lower output. D) increase the exchange rate.