If the price of a good increases by 10 percent, its quantity demanded drops by 50 percent. The price elasticity of demand is:
A. 2.0
B. 1.0
C. -5.0
D. 0.2
Answer: C
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If the income elasticity of money demand is 3/4 and income increases 8%, by about how much does the price level change?
A) Falls by 6% B) Unchanged C) Rises by 6% D) Rises by 8%
What does the law of supply state?
a. Price and quantity demanded are inversely related. b. An increase in demand will cause a leftward shift in the supply curve. c. Price and quantity supplied are positively related. d. A shift in the supply curve must be the result of a change in prices.
Which of the following is a financial intermediary that serves as a bridge between savers and borrowers in the loanable funds market model?
a) Mutual funds b) Corporations c) Government d) Stock market
Exhibit 2-1 Production possibilities curve data ConsumptionGoods CapitalGoods 10 0 9 1 7 2 4 3 0 4 In Exhibit 2-1, according to the information, the opportunity cost of producing 3 units of capital is:
A. 3 units of consumption goods. B. 4 units of consumption goods. C. 6 units of consumption goods. D. 7 units of consumption goods.