The price elasticity of demand is measured as the percentage change in quantity demanded divided by the percentage change in price
Indicate whether the statement is true or false
TRUE
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Based on the figure below, the economy is initially at point A on the monetary policy reaction function (RF1) and the aggregate demand curve (AD1). The actual rate of inflation is ?' and the Federal Reserve's target inflation rate is ?*1. 
If the Federal Reserve lowers its target inflation rate to ?*2, then the Federal Reserve's monetary policy reaction function will ________ and the aggregate demand curve will ________.
A. shift to RF3; shift to AD2 B. shift to RF2; shift to AD2 C. shift to RF2: shift to AD3 D. shift to RF3: shift to AD3
The feedback effect can be thought of as a type of
A) social regulation. B) economic regulation. C) creative response, which reduces the law's effectiveness. D) regulatory lag.
Which of the following best describes a graph showing the supply and demand for foreign exchange?
a. The quantity of foreign exchange is on the horizontal axis and the quantity of the domestic currency is on the vertical axis. b. The quantity of the domestic currency is on the horizontal axis and the quantity of foreign exchange is on the vertical axis. c. The quantity of foreign exchange is on the horizontal axis and the price of foreign exchange in terms of the domestic currency is on the vertical axis. d. The quantity of foreign exchange is on the vertical axis and the price of foreign exchange in terms of the domestic currency is on the horizontal axis. e. The quantity of the domestic currency is on the horizontal axis and the price of foreign exchange in terms of dollars is on the vertical axis.
Every society must deal with the problem of scarcity because:
a. people do not have enough money to buy everything they need. b. government levies heavy taxes on households and firms. c. human beings become satiated as consumption increases. d. human wants are nearly unlimited relative to the availability of resources. e. productive resources, technology, and labor are unlimited.