Demand is said to be inelastic when
A) a given percentage change in price will result in a less than proportionate percentage change in the quantity demanded.
B) demand exhibits zero responsiveness to price changes.
C) small price increases will lead to zero quantity demanded.
D) a given percentage change in price will result in a greater than proportionate percentage change in the quantity demanded.
A
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U.S. net export spending falls when
A) the inflation rate is lower in the United States relative to other countries. B) the growth rate of U.S. GDP is faster than the growth rate of GDP in other countries. C) the value of the U.S. dollar decreases relative to other currencies. D) the price level in the United States falls relative to the price level in other countries.
To maintain a fixed exchange rate, in response to an increase in the government budget deficit the central bank must
a. sell foreign currency from reserves. b. buy foreign currency. c. raise taxes. d. raise government spending. e. pass a law that increases the exchange rate.
What is the assumption underlying public-choice theory?
A) Elected officials believe in cooperating with one another and they seek to avoid competition among themselves. B) The costs and benefits of being efficient are the same whether one is in the private sector or in the public sector. C) Individuals act within the political process to improve their own individual well-being. D) Resources in the public sector are not scarce.
When prices rise
a. the rich benefit at the expense of the poor. b. the poor benefit at the expense of the rich. c. both the rich and poor lose real income. d. the effect in the rich and poor is uncertain.