If the price elasticity of supply is 0.3, supply is:
A. unaffected by price changes.
B. inelastic.
C. unit elastic.
D. elastic.
Answer: B
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A perfectly competitive firm is producing 50 units of output, which it sells at the market price of $23 per unit. The firm's average total cost is $20. What is the firm's total revenue?
A) $23 B) $150 C) $1,000 D) $1,150 E) $20
Which of the following helps explain the multiplier effect?
a) Banks only hold a fraction of their deposits on reserve. b) Income is spent and re-spent in the circular flow model. c) People buy a lot of luxury items. d) Incomes tend to increase with inflation.
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y2. C. P3 and Y1. D. P2 and Y3.
Which of the following is an argument of opponents of devaluations?
A) Devaluations cause relatively slow adjustments. B) Participants in foreign exchange markets have a short memory: if the expected devaluation doesn't occur within a short time-period, they will stop expecting it. C) A devaluation causes a nation with fixed exchange rates to lose credibility in the medium run, driving its interest rate higher. D) all of the above E) none of the above