In Figure 2.1, a "P*" for equilibrium price would go in
A. Box 1.
B. Box 2.
C. Box 3.
D. Box 4.
Answer: C
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Which of the following correctly identifies a method to restore an economy to full employment, if it is operating below full employment due to a decrease in net exports?
A) Reduce the interest rate. B) Increase the real exchange rate. C) Reduce the investment in the economy. D) Reduce the demand for goods and services in the economy.
The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. Automobile owners would pay a larger part of this tax than what is shown in the figure if the
A) demand were more elastic. B) demand were more inelastic. C) supply were more inelastic. D) None of the above because the buyers always pay the entire amount of the tax.