Because Product X has a large positive income elasticity, it is likely that the product
A) has many good substitutes.
B) has few good complements.
C) is a necessity.
D) is a luxury.
D
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High inflation can spiral out of control when
A) expected inflation increases nominal interest rates, causing the Fed to buy bonds, increasing the money supply and further increasing inflation. B) expected inflation decreases nominal interest rates, causing the Fed to buy bonds, increasing the money supply and further increasing inflation. C) expected inflation increases nominal interest rates, causing the Fed to sell bonds, increasing the money supply and further increasing inflation. D) expected inflation decreases nominal interest rates, causing the Fed to sell bonds, increasing the money supply and further increasing inflation.
If the supply curve for orange juice is estimated to be Q = 40 + 2p, then
A) supply is price elastic at all prices. B) supply is price inelastic at all prices. C) supply is elastic only at prices below 20. D) No general statements about price elasticity of supply can be made.