1) All else being equal, the more imprtant an item is in buyers' budgets, the more elastic is demand for the good. (TRUE/FALSE)
2) If the demand curve for a good is a steep, straight line, then the demand for the good is inelastic at every point along that demand curve. (TRUE/FALSE)
3)If the demand for illegal drugs is inelastic, then government efforts to reduce the supply of illegal drugs are likely to cause an increase in total expenditure on them. (TRUE/FALSE)
4) If the demand for mass transit in a city is inelastic, then raising fares will increase mass transit revenue. (TRUE/FALSE)
5)The cross-price elasticity of demand between Levi's blue jeans and Wrangler's blue jeans is most likely positive (TRUE/FALSE)
6) Perfectly inelastic demand occurs when the demand curve is horizontal. (TRUE/FALSE)
7) Among the reasons that farmers' incomes are unstable is _____A) The supply curve for food can shift dramatically rightward or leftward from year to year.B) The demand for food is elasticC) The income elasticity for food is very highD) All of theseE) None of these
8) If the (absolute value of) the price elasticity of demand for a good is greater than one, then demand for the good is _____A) ElasticB) InelasticC) InferiorD) NormalE) Paranormal
9) As we move leftward along a straight-line demand curve, the (absolute value of the) price elasticity of demand ____A) Grows smallerB) Remains constant at zeroC) Remains constant at a value of oneD) Remains constant and equal to the (absolute value of the) slope of the demand curveE) Grows larger
10) If a good is normal, we know that______A) income elasticity is positiveB) The good's price elasticity of demand is positiveC) Demand for the good is elasticD) Demand for the good is inelasticE) Income elasticity is negative
11) When the price of a good rises by 10%, and nothing else changes, the quantity of the good demanded falls by 5%. The price elasticity of demand fort this good is_____A) -0.5%B) -5%C) -5.0%D) -2.0%E) 2.0%
12) If the price elasticity of demand for a good is negative, we know that the good _____.A) Obey's the law of demandB) Is normalC) Is inferiorD) Violates the law of demandE) is inelastically demanded
13) Which of the following would you expect to have the greatest (in absolute value) price elasticity of demand?A) ClothingB) PantsC) Blue jeansD) Levi's Blue jeansE) All of these answers would have approximately the same price elasticity of demand.
14) The price elasticity of demand for a good is -2.0 When the proce of this good rises, what occurs?A) Quantity demanded will rise as wellB) The income of those who buy the good will increaseC) Total expenditure on this good will fall.D) All of theseE) All of these answers would have approximately the same price elasticity of demand.

Question

1) All else being equal, the more imprtant an item is in buyers' budgets, the more elastic is demand for the good. (TRUE/FALSE)
2) If the demand curve for a good is a steep, straight line, then the demand for the good is inelastic at every point along that demand curve. (TRUE/FALSE)
3)If the demand for illegal drugs is inelastic, then government efforts to reduce the supply of illegal drugs are likely to cause an increase in total expenditure on them. (TRUE/FALSE)
4) If the demand for mass transit in a city is inelastic, then raising fares will increase mass transit revenue. (TRUE/FALSE)
5)The cross-price elasticity of demand between Levi's blue jeans and Wrangler's blue jeans is most likely positive (TRUE/FALSE)
6) Perfectly inelastic demand occurs when the demand curve is horizontal. (TRUE/FALSE)
7) Among the reasons that farmers' incomes are unstable is _____A) The supply curve for food can shift dramatically rightward or leftward from year to year.B) The demand for food is elasticC) The income elasticity for food is very highD) All of theseE) None of these
8) If the (absolute value of) the price elasticity of demand for a good is greater than one, then demand for the good is _____A) ElasticB) InelasticC) InferiorD) NormalE) Paranormal
9) As we move leftward along a straight-line demand curve, the (absolute value of the) price elasticity of demand ____A) Grows smallerB) Remains constant at zeroC) Remains constant at a value of oneD) Remains constant and equal to the (absolute value of the) slope of the demand curveE) Grows larger
10) If a good is normal, we know that______A) income elasticity is positiveB) The good's price elasticity of demand is positiveC) Demand for the good is elasticD) Demand for the good is inelasticE) Income elasticity is negative
11) When the price of a good rises by 10%, and nothing else changes, the quantity of the good demanded falls by 5%. The price elasticity of demand fort this good is_____A) -0.5%B) -5%C) -5.0%D) -2.0%E) 2.0%
12) If the price elasticity of demand for a good is negative, we know that the good _____.A) Obey's the law of demandB) Is normalC) Is inferiorD) Violates the law of demandE) is inelastically demanded
13) Which of the following would you expect to have the greatest (in absolute value) price elasticity of demand?A) ClothingB) PantsC) Blue jeansD) Levi's Blue jeansE) All of these answers would have approximately the same price elasticity of demand.
14) The price elasticity of demand for a good is -2.0 When the proce of this good rises, what occurs?A) Quantity demanded will rise as wellB) The income of those who buy the good will increaseC) Total expenditure on this good will fall.D) All of theseE) All of these answers would have approximately the same price elasticity of demand.

		the discovery of new and better roundabout methods of production.
		a lower rate of time preference in society.
		a lower interest rate.
		a higher interest rate.
		a and c

		All persons have a high rate of time preference.
		People with a high rate of time preference are more likely to be borrowers than people with a low rate of time preference.
		People with a high rate of time preference are more likely to be lenders than people with a low rate of time preference.
		A high interest rate is the cause of a high rate of time preference.
		none of the above

		The nominal interest rate is always higher than the real interest rate since the nominal interest rate equals the real interest rate plus the expected inflation rate.
		The nominal interest rate is always lower than the real interest rate since the nominal interest rate equals the real interest rate minus the expected inflation rate.
		The nominal interest rate can equal the real interest rate, but to do so the expected inflation rate must be zero percent.
		It is the nominal interest rate-not the real interest rate-that matters to borrowers.

		the supply and demand for loanable funds will decrease.
		the supply and demand for loanable funds will increase.
		the supply of loanable funds will decrease, and the demand for loanable funds will increase.
		the supply of loanable funds will increase, and the demand for loanable funds will decrease.

		the demand for loanable funds curve will shift rightward, and the supply of loanable funds curve will shift leftward.
		the demand for loanable funds curve will shift leftward, and the supply of loanable funds curve will shift rightward.
		both the demand for loanable funds curve and the supply of loanable funds curve will shift leftward.
		both the demand for loanable funds curve and the supply of loanable funds curve will shift rightward.

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