Suppose the demand curve for a good is downward sloping and the supply curve is upward sloping. At the market equilibrium, if demand is more elastic than supply in absolute value, a $1 specific tax will
A) raise the price to consumers by 50 cents.
B) raise the price to consumers by less than 50 cents.
C) raise the price to consumers by more than 50 cents.
D) raise the price to consumers by $1.
B
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Ace has always been a top student, so it was no surprise he won a $1,500 scholarship from the company where he worked summers to help with college expenses. Ace decides to spend his scholarship money on a new Apple MacBook. How will GDP be affected by Ace's recent purchases?
A. Consumption will go up by $1,500, because a computer is a durable good. B. Investment will go up by $1,500, because a computer is a durable good. C. GDP will not be affected, since Ace acquired the computer with scholarship money. D. Consumption will go up by $1,500, because a computer is a nondurable good.
Figure 10-1
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In Figure 10-1, what is the equilibrium level of real GDP and equilibrium price?
A. $6,000 billion real GDP and price level of 110 B. $5,000 billion real GDP and price level of 120 C. $5,000 billion real GDP and price level of 110 D. $7,500 billion real GDP and price level of 100