Assume a price elasticity of demand of 0.50. If the tobacco lobby is successful in reducing a tax on the price of cigarettes by 10 percent, the quantity demanded will:
A. Decrease by 5 percent.
B. Decrease by 2 percent.
C. Increase by 5 percent.
D. Increase by 2 percent.
Ans: C. Increase by 5 percent.
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Which of the following indicates that there is a shortage in the market?
A) Demand is rising. B) Demand is falling. C) Price is rising. D) Price is falling.
Income is considered to be a
A) nontaxable stream of funds. B) flow. C) stock. D) resource.
Refer to the diagram where D and S are the United States' demand for and supply of Swiss francs. At the equilibrium exchange rate, E, the United States' balance of payments is in equilibrium. Under a system of flexible exchange rates, the shift in demand from D to D' will:
A. ultimately reduce U.S. exports and raise U.S. imports.
B. cause the dollar to appreciate.
C. cause the Swiss franc to depreciate.
D. cause the dollar to depreciate.
A particularly severe recession is called a(n):
A. lull. B. growth recession. C. depression. D. super recession.