When would it be plausible to describe the demand for a product by drawing a straight line, Q = a - bP?
A. Only if no important factors other than price affect demand
B. In the vast majority of scenarios
C. Practically never
D. If we believe that factors other than price alone determine demand
A. Only if no important factors other than price affect demand
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Using a graph, show the effects of a weaker dollar on the economy. Explain
What will be an ideal response?
The nominal exchange rate is 15 crowns per florin, the domestic price level is 6 florins/bottle, and the foreign price level is 2 crowns/bushel
(a) What is the real exchange rate? (b) What is the real exchange rate in the foreign country? (c) If the domestic price level rises to 8 florins/bottle, what must the nominal exchange rate become if the real exchange rate remains unchanged?
Explain the time inconsistency of monetary policy
Before 1970 the United States generally had a trade ________ and since 1970 the United States has generally run a trade ________.
A. deficit; deficit B. deficit; surplus C. surplus; deficit D. surplus; surplus