If the calculated price elasticity of demand between two points is -4, demand is
A) inelastic.
B) elastic.
C) unresponsive to price.
D) unit-elastic.
Ans: B) elastic.
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If the output gap equals -200 billion, then:
A. potential GDP is lower than actual GDP. B. there is no cyclical unemployment. C. cyclical unemployment equals the sum of structural and frictional unemployment. D. there is a recessionary gap.
Suppose firms in a perfectly competitive market are incurring an economic loss. Over time
A) other firms enter the market, so the price rises and the economic loss decreases. B) some firms leave the market, so the price rises and the economic loss decreases. C) other firms enter the market, so the price falls and the economic loss decreases. D) some firms leave the market, so the price falls and the economic loss decreases.
What advantages does a money economy have over a barter economy?
Functional finance is that part of the deficit that is attributable to
A. the exponential increase in interest rates. B. spending programs or tax cuts passed to stimulate an economy in recession. C. fighting the war on terror. D. specific programs (like Medicare).