Which of the following has the highest price elasticity of demand?
A. Medical care
B. Restaurant meals
C. Bread
D. Household electricity
B. Restaurant meals
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Refer to the table above. If there is no statistical discrepancy, the official settlement account balance equals
A) +$200 billion. B) -$20 billion. C) zero D) +$220 billion. E) +$20 billion.
The BP curve shifts to the left when:
a. the exchange rate falls. b. interest rates rise. c. income rises. d. imports increase.
Stockholders of ComfortAir Corporation, an air conditioner and furnace manufacturer, are concerned that the companies executives may take on greater risks than stockholders desire. This example illustrates
a. moral hazard and market risk. b. moral hazard and firm specific risk. c. adverse selection and market risk. d. adverse selection and firm specific risk.
By the time Paul Volcker took office as the new Federal Reserve chairman in 1979, the inflation rate exceeded 10%. By the end of 1986 the inflation rate had been brought down to 1.9%. Which of the following is true about the Volcker Disinflation?
A) lower inflation resulted from a tightening of monetary policy B) by raising the federal funds rate to over 20%, the Federal Reserve stimulated the economy resulting in lower levels of both inflation and the unemployment rate by the early 1980s C) the unemployment rate was brought down by 1982 but it took longer to reach lower inflation rates D) all of the above E) none of the above