Suppose that the cross price elasticity of demand between goods A and B equals 1.25. Which of the following is TRUE?
A. Goods A and B are complements because the cross price elasticity is positive.
B. Goods A and B are substitutes because the cross price elasticity is greater than one.
C. Goods A and B are substitutes because the cross price elasticity is positive.
D. Goods A and B are complements because the cross price elasticity is greater than one.
Answer: C
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The market supply of labor curve has a positive slope if higher wages induce households to choose
A) leisure rather than supplying labor in the labor market. B) supplying labor in the labor market rather than leisure. C) demanding labor rather than supplying it. D) None of the above answers is correct.
Explain why the simple deposit multiplier overstates the true deposit multiplier
What will be an ideal response?
A country's long-run aggregate supply curve will shift to the left when there is (are)
A) fewer regulatory impediments to business. B) a discovery of new oil reserves in that country. C) a reduction in the labor force. D) a reduction in the money supply.
Suppose the price of an ounce of silver is 100 nuevos soles in Peru and $400 in the United States. This implies:
a. the Peruvian nuevo sol is worth four times the value of a U.S. dollar. b. the Peruvian nuevo sol is worth one-fourth the value of a U.S. dollar. c. Peru's economy must be four times larger than the U.S. economy. d. the U.S. economy must be four times larger than that of Peru. e. the U.S. dollar is worth four times the value of a Peruvian nuevo sol.