If the elasticity of demand for bagels is equal to 1, moving along the demand curve for bagels, an increase in price will:
a. not affect the quantity purchased.
b. decrease the quantity demanded and increase total revenue.
c. decrease the quantity demanded and decrease total revenue.
d. decrease the quantity demanded and leave total revenue unchanged.
Question 2The ________ interest is the relevant interest rate in the money market; the __________ interest rate is the relevant interest rate in the loanable funds market.
a. Nominal; nominal.
b. Nominal; real
c. Real; nominal
d. Real; real
Question 3An expansion in a country's capital stock is associated with a(n) _____.
a. increase in potential GDP
b. decline in future consumption
c. increase in human capital
d. decline in the rate of investment
e. increase in national debt
Question 4Which of the following would most likely feature elastic demand?
a. heart surgery
b. a required textbook
c. fresh green beans
d. all of the above
Question 5If unemployment is the major problem in the economy, which of the following would be an appropriate monetary policy response?
a. decrease taxes
b. decrease the discount rate
c. sell government bonds
d. all of the above
Question 6The baby boom of the postWorld War II period had the greatest impact on the size of the U.S. labor force in _____.
a. the 1980s
b. the 1970s
c. the 1960s
d. the 1950s
e. the late 1940s
Question 7If the price of a product is lowered from 300 to 270, and as a result the quantity demanded increases from 25 to 30 units, we know that in that range:
a. demand has declined.
b. demand is elastic.
c. demand is unit elastic.
d. demand is inelastic.
e. demand is perfectly elastic.
Question 8If unemployment is the major problem in the economy, which of the following would be an appropriate monetary policy response?
a. decrease the required reserve ratio
b. decrease the interest rate the Fed pays on bank reserves
c. buy government bonds
d. all of the above
Question 9Which of the following is a barrier to economic growth in low-income countries?
a. A shortage of labor
b. A declining population
c. Lack of investment in research and development
d. Lack of natural resources
e. An increasing amount of savings
Question 10An increase in demand will:
a. reduce total revenue.
b. increase total revenue.
c. increase total revenue only if supply is inelastic.
d. increase total revenue only if supply is inelastic.
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