Suppose the quantity of gasoline is measured in gallons and the price of gasoline is measured in dollars. The price elasticity of demand is 0.67
If the price of gasoline was now measured in cents rather than dollars, the price elasticity of demand would now be A) 0.0067.
B) 0.67.
C) 6.7.
D) 67.0.
B
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The Fed initiates a contractionary monetary policy that is correctly anticipated by economic agents in the economy. The result is
A) decreased prices, but no change in real GDP. B) decreased prices and decreased real GDP in the short run, but only decreased prices in the long run. C) decreased real GDP in the short run and decreased prices in the long run. D) decreased real GDP and prices in both the short run and the long run.
Figure 11-1
In Figure 11-1, to reach the level of potential GDP, the administration of President Obama would most likely advocate
a.
increasing Social Security payments.
b.
decreasing defense spending.
c.
decreasing personal income taxes.
d.
All of the above are correct.