If the price of margarine falls, the demand for butter will
A. decrease.
B. remain unchanged.
C. increase.
D. rise at first and then fall.
Answer: A
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When the Phillips curve was viewed as a structural relationship, it was believed that the Fed could
A) permanently reduce the unemployment rate if it were willing to accept an increase in the inflation rate. B) permanently reduce the inflation rate as it permanently reduced the unemployment rate. C) permanently reduce the unemployment rate if it were willing to increase the real interest rate. D) permanently reduce the inflation rate if it were willing to decrease the real interest rate.
Individuals have a tradeoff between leisure and work. When income from working is taxed, the cost of leisure is reduced in relative terms
a. True b. False Indicate whether the statement is true or false
Answer the following statements true (T) or false (F)
1. The classical economists held that the rate of interest would equate planned investment and planned saving, so that all saving would eventually be invested. 2. According to the Keynesian analysis, equilibrium occurs at the point where total aggregate expenditure equals total output. 3. According to the Keynesian analysis, as income increases, the marginal propensity to consume will rise. 4. According to the Keynesian analysis, equilibrium will occur where planned injections equal planned leakages. 5. Any time that planned leakages exceed planned injections, the economy will expand.
If the percentage change in price is 2 and the percentage change in quantity supplied is 10, supply is:
A. unaffected by price changes. B. inelastic. C. unit elastic. D. elastic.