In each of the following situations, list what will happen to the equilibrium price and the equilibrium quantity for a particular product, which is an inferior good
a. The population increases and productivity increases.
b. Income increases and the price of inputs decrease.
c. The number of firms in the market decreases and income increases.
d. Consumer preference increases and the price of a complement decreases.
e. The price of a substitute in consumption decreases and the price of a substitute in production decreases.
a. Quantity increases; Price may increase or decrease.
b. Price decreases; Quantity may increase or decrease.
c. Quantity decreases; Price may increase or decrease.
d. Price increases; Quantity increases.
e. Price decreases; Quantity may increase or decrease.
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Use the following graphs to answer the next question.
In the graphs, the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve, respectively. All numbers are in billions of dollars. The interest rate and the level of investment spending in the economy are at point D on the investment demand curve. To achieve the long-run goal of a noninflationary full-employment output of Qf in the economy, the Fed should try to ________.
A. increase aggregate demand by decreasing the interest rate from 4% to 2% B. decrease aggregate demand by increasing the interest rate from 2% to 4% C. decrease aggregate demand by increasing the interest rate from 4% to 6% D. increase the level of investment spending from $120 billion to $150 billion
A person is dynamically consistent if:
A. lapses in his self-control never occur. B. his preferences over the alternatives available at some future date do not change as the date approaches or once it arrives. C. he always wants to follow through on his plans and intentions. D. All of these are necessary for dynamic consistency.
The size of the underground economy is probably large when:
A. the cost of doing business legally is low. B. bribes are often necessary to cut through bureaucratic red tape. C. taxes are low. D. All of these statements are true.
Refer to the information provided in Figure 3.11 below to answer the following question(s).
Figure 3.11Refer to Figure 3.11. A decrease in supply is represented by the movement from
A. S2 to S1. B. Point B to Point A along supply curve S2. C. Point B to Point C along supply curve S2. D. S2 to S3.