It is likely that ______________ has an income elasticity less than 1, and _____________ have an income elasticity more than 1.
A. coffee; sailboats
B. sailboats; cars
C. vacations; cell phones
D. filet mignon; chicken
A. coffee; sailboats
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Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
Empirical studies indicate that the velocity of money tends to increase when interest rates rise. Which of the following best explains why this is true?
a. When the velocity of money is high, banks will increase their lending interest rates. b. An increase in the growth rate of GDP will cause the velocity of money to increase. c. The higher interest rates increase the cost of holding money balances and, thereby, increase the velocity of money. d. Both the velocity of money and interest rates will rise when the inflation rate falls.
Which of the following situations will cause the demand for U.S. dollars to rise in the foreign exchange market?
a. The price level in the United States rises faster than the price level in the United Kingdom. b. The interest rate in the United Kingdom falls while the interest rate in the United States remains constant. c. The real GDP in the United States grows while the real GDP in the United Kingdom remains constant. d. The tax rate in the United States rises while the tax rate in the United Kingdom does not change.
Above is a firm's average product of labor and marginal product of labor curves. The price of labor is $60 per unit. When the firm uses 6 units of labor, what is marginal cost?
A. $0.25 B. $7.06 C. $10.25 D. $5 E. $6.67