Draw a scatter diagram of the interest rate and the unemployment rate. Describe the relationship
What will be an ideal response?
To make a scatter diagram of the interest rate and the unemployment rate, plot the interest rate on the x-axis and the unemployment rate on the y-axis. The graph will be a set of dots and is shown in Figure A1.6 . The pattern made by the dots tells us that when the interest rate increases, the unemployment rate usually decreases so there is a negative relationship.
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In both monopolistically competitive and perfectly competitive industries
A) firms produce products for which there are no close substitutes. B) there are high barriers to entry. C) there are many buyers and sellers. D) firms are price takers.
Suppose x is an inferior good. Then we will overestimate the deadweight loss from taxes on consumption good x if we use the uncompensated demand curve rather than the marginal willingness to pay (or compensated demand) curve.
Answer the following statement true (T) or false (F)