Suppose that goods X and Y are substitutes and the price of good Y falls. We would then expect
A. the quantity of good Y demanded to increase and the demand for good X to increase also.
B. an increase in the demand for good X and a decrease in the quantity of good Y demanded.
C. an increase in the demand for both good X and good Y.
D. an increase in the quantity demanded of good Y and a decrease in the demand for good X.
Answer: D
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Economists speak of price elasticity of demand. Which word below is synonymous with "elasticity"?
A) Futility B) Sensitivity C) Relativity D) Serendipity
According to the classical view,
A. velocity is constant, which means changes in price will cause changes in price or quantity. B. quantity is constant, which means changes in the money supply could cause either changes in velocity or changes in prices. C. velocity and price are constant so that changes in the money supply causes changes in quantity. D. velocity and quantity are constant so that changes in the money supply cause changes in prices.