If the substitution effect is stronger than the income effect, an increase in real interest rates will lead to ________ in aggregate consumption and will lead to ________ in household saving
A) an increase; a decrease
B) a decrease; a decrease
C) a decrease; an increase
D) an increase; an unclear change
B
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If a perfectly competitive firm raised the price of its product,
A) its profits would increase. B) the quantity of output it sells decreases to zero. C) rival firms will follow suit and raise their prices also. D) the firm will be forced to advertise more. E) its total revenue would rise but its total cost would rise by more.
Suppose that producers are richer than consumers. Is a price support program fair? Explain your answer
What will be an ideal response?
The effort curve is
A) horizontal, because work effort is independent of the real wage. B) negatively sloped, because of diminishing marginal returns to labor. C) positively sloped, because of the law of increasing cost. D) S-shaped, because a small increase in the real wage will increase work effort more at an intermediate wage than at a low wage or at a high wage.
The answer is: "A geographic area in which exchange rates can be fixed or a common currency used without sacrificing domestic economic goals." What is the question?
A) What is a flexible exchange rate system? B) What is a managed float area? C) What is a purchasing power parity area? D) What is an optimal currency area?