Figure 10-4
In Figure 10-4, if full employment occurs at 5,000 and the price level is currently 130, then we can expect the
a.
aggregate supply curve to shift to the left until a new equilibrium is established at an output level of 4,000.
b.
aggregate demand curve to shift to the right until a new equilibrium is established at an output level of 6,000.
c.
the price level to fall to 110.
d.
aggregate demand to shift to the left and aggregate supply to shift to the right until the price level reaches 130.
c
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The income elasticity of demand for movies in the United States is 3.41. If people's incomes decrease by 1 percent, what is the decrease in the quantity of movies demanded?
What will be an ideal response?
Suppose a human life is worth $10 million. Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 3.5 to 2.9 percent over the life of the system. The city should install the new lighting system if its cost does not exceed
a. $60,000. b. $290,000. c. $350,000. d. $600,000.