Figure 5-3
Suppose that the market price rises from $3 to $5. What is the change in market demand?
A. 80
B. 30
C. 50
D. 110
Answer: B
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Suppose a record company produces both swing and rhythm & blues music. An increase in the market demand for swing music therefore tends to
A) increase the demand for rhythm & blues music. B) increase the cost of producing rhythm & blues music. C) decrease the cost of producing rhythm & blues music. D) leave the cost of producing swing music unchanged.
A price index can fall from one year to the next: a. even when nominal GDP falls
b. even when real GDP falls. c. even when some individual good's prices rise. d. in any of the above circumstances.
Which of the following is an important assumption in the short-run macro model?
a. Government spending depends on income. b. Output does not change. c. Firms do not maintain inventories. d. Investment depends on income. e. Prices do not change.
Economic models
a. are not useful because they omit many real-world details. b. are usually composed of diagrams and equations. c. are useful because they do not omit any real-world details. d. are usually plastic representations of the economy.