According to the textbook, for most goods and services-foods, beverages, entertainment, etc.-the income elasticity of demand is:
A. larger in the short run than in the long run.
B. larger in the long run than in the short run.
C. about the same in the short run and in the long run.
D. is difficult to differentiate from the short run to the long run.
Answer: B. larger in the long run than in the short run.
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When a factor of production is in fixed supply, the revenue it earns
a. consists entirely of rent. b. is an efficiency wage. c. is independent of how the resource is used. d. consists entirely of deadweight loss.
Generally speaking, a country whose currency depreciates will experience, as a result,
A. Inflationary pressure because the prices of imports rise. B. Increasing unemployment in export sectors. C. Falling interest rates from a capital outflow. D. Reduced aggregate demand.