Suppose the demand curve for a product is represented by a typical downward-sloping curve. Now suppose the demand for this product decreases. Which of the following statements accurately predicts the resulting decrease in price?
A) The increase in price is not affected by the elasticity of the supply curve.
B) The more elastic the supply curve, the smaller the price decrease.
C) The decrease in price will always be proportional to the magnitude of the demand shift.
D) The more elastic the supply curve, the greater the price increase.
B
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A tax that imposes a small excess burden relative to the tax revenue that it raises is
A) an efficient tax. B) a payroll tax. C) a sin tax. D) a FICA tax.
Because central banks have not been willing to give up their option of intervening in the foreign exchange market, the current international financial system can best be described as a
A) variable-pegged exchange rate system. B) moving-pegged exchange rate system. C) hybrid of a fixed exchange rate and flexible exchange rate system. D) flexible-exchange, dollar-pegged exchange rate system.
A fixed exchange rate can be an equilibrium rate even if there is a permanent shift in the foreign exchange market supply and demand curves
a. True b. False Indicate whether the statement is true or false
Sadie works at a factory for $15 an hour and typically works 40 hours a week. Sadie gets a pay raise and now earns $20 an hour. She decides to work 45 hours a week at $20 an hour. Her response to the pay increase demonstrates the:
A. labor effect outweighing the price effect. B. price effect outweighing the income effect. C. income effect outweighing the price effect. D. income effect outweighing the substitution effect.