Suppose that the price of peanuts falls from $3 to $2 per bushel and that, as a result, the total revenue received by peanut farmers changes from $16 to $14 billion. Thus:
A. the demand for peanuts is elastic.
B. the demand for peanuts is inelastic.
C. the demand curve for peanuts has shifted to the right.
D. no inference can be made as to the elasticity of demand for peanuts.
Answer: B
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A) SRAS1 to SRAS2. B) SRAS2 to SRAS1. C) point A to point B. D) point B to point A.
When there are two large open economies, the world real interest rate will be such that
A) desired international lending by one country equals desired international borrowing by the other country. B) desired international lending will be the same in both countries. C) desired international borrowing will be the same in both countries. D) desired international lending and borrowing will be zero in both countries.