Generally, the prime interest rate:
A. moves in the opposite direction as the federal funds rate.
B. remains constant over long periods of time.
C. is highly inflexible downward.
D. moves in the same direction as the federal funds rate.
D. moves in the same direction as the federal funds rate.
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The major advantage of using cross-sectional analysis for long-run costs studies includes
A) the inclusion in the sample of different plants of different sizes. B) the avoidance of having to adjust for inflationary trends. C) the avoidance of having to account for interregional cost differences. D) All of the above E) A and B above
Dana is an art historian who needs to travel to Italy to do research. Art historians usually don't have a lot of money, and therefore are very sensitive to price changes. Dana's funding agency pays her a fixed amount to travel. At current exchange rates, Dana can stay in Italy for 35 days. If the exchange rate improves by 10 percent, she can stay for 40 days. What is Dana's price elasticity of
demand for days spent in Italy? a. It is approximately equal to 2.3. b. It is approximately equal to 1.6. c. It is approximately equal to 1.4. d. It is approximately equal to 0.4. e. It is approximately equal to 0.1.