The price of a California orange is $2.00 and the price of a Florida orange is $1.00. If the price of California oranges goes down by one cent and the quantity demanded of Florida oranges goes up by one thousand, then
a. the cross elasticity is 0.4.
b. these goods are substitutes.
c. the price elasticity of demand for California oranges is 0.4.
d. these goods are complements.
d. these goods are complements.
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Which account of the balance of payments is most likely to be directly affected by a rise in the real risk-free interest rate in a foreign country?
a. Current international transactions b. Net nonreserve-related international borrowing/lending c. Official reserve-related (central bank) transactions d. None.
Use the following table to answer the question below. Jane's Production Possibilities SchedulePounds of Green BeansPounds of Corn08020604040602080 0Jane's production possibilities schedule demonstrates that she
A. does not face an opportunity cost when producing green beans. B. faces an opportunity cost when producing green beans. C. can produce an unlimited amount of corn if she gives up enough green beans. D. cannot produce green beans and corn together.
The IS curve has a
A. negative slope because a higher interest rate leads to a decrease in government spending which reduces the domestic output level. B. positive slope because a higher interest rate leads to an increase in aggregate savings and thus an increase in domestic real investment. C. negative slope because a higher interest rate leads to a decrease in aggregate demand that results in lowering of the domestic production level. D. positive slope because a higher interest rate leads to an increase in foreign investment and thus raises the level of aggregate income.
According to classical economists, in recessions, the government should
A. eliminate barriers to labor market adjustment, such as burdensome regulations on businesses. B. stimulate the economy to increase demand. C. actively use fiscal policy to combat the recession. D. increase the minimum wage so that poor people will be able to afford necessities.