Refer to the information provided in Figure 5.1 below to answer the question(s) that follow.
Figure 5.1Refer to Figure 5.1. The price elasticity of demand for tickets
A. is infinity.
B. varies at every point along the demand curve.
C. is equal to zero.
D. is equal to 1.
Answer: C
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Assume the marginal propensity to consume is 0.96 . Firms become pessimistic and decrease investment spending by $100 billion. Other things equal, real GDP will:
a. decrease by $100 billion. b. not change. c. decrease by $96 billion. d. decrease by $2,500 billion.
Consider a market that is in equilibrium. If it experiences an increase in supply, what will happen? The supply curve will shift to the:
A. right and the equilibrium price and quantity will rise. B. right and the equilibrium price will decrease and the equilibrium quantity will increase. C. right and the equilibrium price and quantity will fall. D. left and the equilibrium price and quantity will fall.