Suppose the income elasticity of demand is -0.5 for good X. This implies that a 5% decrease in income will cause the quantity demanded of good X to
a. increase by 2.5%, and X is an inferior good.
b. decrease by 2.5% and X is a normal good.
c. increase by 10% and X is an inferior good.
d. decrease by 10% and X is a normal good.
a
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Suppose the market in Figure 9.4 is currently in equilibrium. If the government establishes a price floor of $50, how many widgets will be sold?
A) 20 B) 30 C) 40 D) 50 E) 60
In the market for Canadian dollars measured in US dollars, the supply of Canadian dollars is
a. The demand for Canadian dollars b. The demand for US Dollars c. The supply of US dollars d. None of the above
In a majority-rules democracy, economic thinking suggests that we should expect to see institutions and policies that
a. are short-sighted. b. take the long view, sacrificing current benefits to get larger future benefits. c. benefit the common citizen at the expense of narrow special interest groups which, after all, have fewer voters. d. are biased against income transfer programs, regardless of constitutional limits.
Identify the correct reason behind the negative slope of the aggregate demand curve
a. Declining marginal ability b. Nature of opportunity costs c. Inverse relationship between price level and real GDP demanded. d. Overall price level