If the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will:
A. increase the quantity demanded by about 2.5 percent.
B. decrease the quantity demanded by about 2.5 percent.
C. increase the quantity demanded by about 25 percent.
D. increase the quantity demanded by about 250 percent.
Answer: C
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Employment and (total) potential GDP increase if the
A) labor supply curve shifts rightward and the labor demand curve does not shift. B) labor demand curve shifts leftward more than the labor supply curve shifts rightward. C) labor demand curve shifts leftward and the labor supply curve does not shift. D) None of the above answers are correct.
An expansionary fiscal policy is likely to result in
A) higher interest rates and lower private investment. B) lower interest rates and higher private investment. C) higher interest rates and higher private investment. D) lower interest rates and lower private investment.