1Assume we have a usual downwardsloping demand curve in pric

1.Assume we have a usual downward-sloping demand curve (in price and quantity space), where price is on the vertical (or y) axis and quantity is on the horizontal (or x) axis. This demand curve shows a:

a positive relationship between demand and price

a negative relationship between demand and price

a positive relationship between quantity demanded and price

a negative relationship between quantity demanded and price

2.A friend of yours tells you she is interested in knowing more about the economy\'s recent growth experience. She has a data set for the economy\'s nominal GDP. She does some simple calculations and discovers that last year nominal GDP increased by 5%. She tells you that this is clearly a sign that the economy\'s performance last year was strong. She also tells you that she\'s learned that the national inflation rate last year was 5.5%. Given this information, you would likely tell your friend that:

she\'s correct; the information makes clear that the economy\'s real growth last year was unquestionably strong.

she\'s incorrect; the information makes clear that the economy\'s real growth last year was actually negative.

she\'s correct; the information makes clear that the economy\'s real growth last year was greater than 10%.

she can\'t say anything definitive about the economy\'s real growth last year because she doesn\'t have enough information.

3.Bill has been gainfully employed for 30 years as a machinist for a manufacturer of automobile engine component parts. He is suddenly laid off by his employer. Despite the fact that the larger national economy is growing quickly -- a fact that is reflected in a very low national unemployment rate -- his employer tells him that stiff competition by new market entrants is the reason for his lay off. Bill immediately begins to look for a new job and realizes there are several job openings in his local economy. At the same time, Bill quickly realizes his work experience at the engine component factory is making it very tough for him to land one of these open jobs -- most of which are in health services. Yet, he continues to actively search for a job. Bill might be said to be:

cyclically unemployed.

seasonally unemployed.

frictionally unemployed.

structurally unemployed.

Solution

1. A downward sloping demand curve follows law of demand i.e. there is a negative relationship between quantity demanded and price. If price increases quantity demanded will decrease and if price decreases, the opposite will be true.

Answer-option D