Suppose the demand for rental apartments decreased substantially. We would expect to observe
A) no change in rent and a sharp reduction in quantity supplied in the short run, and an even larger decrease in quantity supplied in the long run.
B) a large decrease in quantity supplied in the short run, followed by a counter-reaction and an increase in quantity supplied in the long run.
C) a small decrease in quantity supplied and significantly lower rents in the short run, and quantity supplied to decrease much more in the long run.
D) a large decrease in quantity supplied in the short run and the long run, but much larger reductions in rent in the long run.
Answer: C
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How does contractionary monetary policy affect net exports in the short run?
A) Contractionary monetary policy reduces exports and increases imports. B) Contractionary monetary policy increases exports and reduces imports. C) Contractionary monetary policy increases exports and increases imports. D) Contractionary monetary policy reduces exports and reduces imports.
See the information in Scenario 4.4. Suppose P = 10, Pc = 100, Pd = 2, A = 5, and I = 50. What is the income elasticity of demand?
A) 0 B) 5/9 C) 1 D) 9/5 E) none of the above