If the absolute price elasticity of demand is 2, a 10 percent increase in the price will cause
A. the quantity demanded to decrease by 2 percent.
B. the quantity demanded to decrease by 20 percent.
C. the quantity demanded to decrease by 50 percent.
D. the quantity demanded to decrease by 5 percent.
Answer: B
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Suppose that you are spending two hours a day studying economics, and your grade is 85 percent. You want a higher grade and decide to study for an extra hour a day. As a result, your grade rises to 90 percent. Your marginal benefit is the
A) 5 point increase in your grade minus the opportunity cost to you of spending the hour studying. B) extra hour per day you spend on studying. C) 5 point increase in your grade. D) three hours per day you spend on studying.
Banks are ________ that link lenders (depositors) to borrowers. Banks exist because they can specialize in evaluating the likelihood of borrower repayment and reducing risk by developing a diversified portfolio rather than lending to a single borrower
a. monopolies b. non-profit organizations c. financial intermediaries d. government agencies
Which of the following will not cause aggregate private spending to increase?
A) an increase in expected future real interest rates B) an increase in government spending C) a reduction in future taxes D) all of the above E) none of the above
A regressive income tax is defined as a tax for which
A) total taxes paid increase with the level of income. B) total taxes paid are independent of the level of income. C) the average tax rate increases with the level of income. D) the average tax rate decreases with the level of income.