One way the government can boost the economy out of a recession is:
A. with public announcements telling the public to save their money.
B. by increasing government spending.
C. by setting price ceilings on most goods so people can afford them.
D. None of these will help an economy in recession.
Answer: B
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The government heavily subsidizes the production of ethanol to encourage the purchase of ethanol over oil, a less environmentally friendly form of energy. Given that the supply elasticity of ethanol, ?, is estimated to be about 0
13, what would the elasticity of demand, ?, have to be for consumers to receive at least half of the subsidy, and therefore encourage ethanol consumption? A) ? must be less than . B) ? must be greater than . C) ? must be more inelastic than the elasticity of supply. D) Both A and C.
If transaction costs are high, then it is more likely a firm's demand curve is downward sloping
Indicate whether the statement is true or false