Price elasticity of demand shows how:
a) To compute the slope of the demand curve.
b) Price responds to demand changes.
c) Quantity demanded responds to price changes.
d) Quantity demanded responds to changes in the price of other goods.
Answer: c) Quantity demanded responds to price changes.
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The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following statements is TRUE?
A) Producing 0 chocolate bars and 100 cans of cola is both attainable and efficient. B) Producing 20 chocolate bars and 80 cans of cola is attainable, but inefficient. C) Producing 30 chocolate bars and 38 cans of cola is only attainable with an increase in technology. D) Producing 40 chocolate bars and 0 cans of cola is unattainable and inefficient.
Which statement is a good argument in support of policy activism?
A) Policy lags are generally longer than the time it takes the self-correcting mechanism to work. B) Activist policies help to ensure stability of the real interest rate. C) Well-considered policies can assist the economy's self-correcting mechanism, thus reducing the variability of inflation and unemployment. D) all of the above E) none of the above