The Price of a Gallon of Gasoline Increases 10% This

question 175

Multiple Choice

The price of a gallon of gasoline increases 10% this year. As a result, which of the following events is MOST likely to occur?

• A) More people will drive their cars.
• B) Public transportation usage will decrease.
• C) Gasoline expenditures will increase if gasoline is an inelastic good.
• D) Fewer people will ride bicycles, a substitute for car travel.

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Definitions:

Standard of Living

The degree of wealth and material comfort available to a person or community.

Aggregate Expenditures

are the total amount of spending on goods and services in an economy at a given level of income during a specified period.

Recession

A phase of short-term economic downturn characterized by decreased trading and industrial output, generally recognized by a drop in Gross Domestic Product across two consecutive quarters.

National Debt

The aggregate financial obligations incurred by a government of a country through borrowing.