The cross-price elasticity of demand between two goods that are substitutes can never be:
A. greater than one.
B. positive.
C. negative.
D. less than one.
Answer: C
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Bananaland produces only bananas and sunscreen and the quantities and prices for 2012 and 2013 are given in the table above. The base year is 2012. Real GDP in 2012 is equal to
A) $800. B) $640. C) $625. D) $500. E) $200.
Inflation targeting is one policy that attempts to deal with the problem of:
a. dollarization. b. time inconsistency. c. the tradeoff between inflation and unemployment. d. the liquidity trap. e. none of the above.
In the long run aggregate:
A. demand is fixed. B. supply is fixed. C. demand tends to shift to the right. D. supply tends to shift to the left.
In explaining the upswing (or recovery) phase of internally induced cycles, the income multiplier causes national income to increase, which
a. decreases investment, cutting short the upswing phase b. increases investment, prolonging the upswing phase c. increases saving, cutting short the upswing phase d. decreases saving, prolonging the upswing phase e. leads to equilibrium and the end of the upswing phase