Suppose the price of a DVD rose from $15 to $17 and the quantity demanded decreased from 1,000 per month to 900 per month. Using the midpoint formula, the ________ percent change in price led to a ________ percent change in the quantity demanded
A) 12.5; 10.5
B) 13.3; 10.0
C) 11.8; 11.1
D) 8.0; 9.5
E) None of the above answers is correct.
A
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Your roommate argues that he can think of no better situation than living in a deflationary economy, as prices of goods and services would continuously fall. You disagree and argue that during a deflation, people can be made worse off because
A) the purchasing power of the currency would decrease. B) the value of the real interest rate will drop below the nominal interest rate. C) borrowers will have to pay increasing amounts in real terms over time. D) the purchasing power of people's incomes would increase.
The function of money that enables money to be used for future purchases is called:
A) medium of exchange. B) store of value. C) unit of account. D) measure of power.