If the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a
a. 0.6 percent increase in the quantity demanded.
b. 1.5 percent increase in the quantity demanded.
c. 2 percent increase in the quantity demanded.
d. 6 percent increase in the quantity demanded.
a
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The level of potential output in the United States increases as the
A) supply of labor decreases. B) demand for labor decreases. C) supply of labor increases. D) stock of capital decreases.
The application of Solow's growth theory to the explanation of the slowdown in productivity growth in the United States suggests that the slowdown is primarily caused by
A) reduced growth in the capital stock per hour of work. B) reduced growth in the technical change or total factor productivity. C) slow residual growth of the capital stock. D) ignorance since people save and invest less.