Gruel is an inferior good. Hence, a decrease in people's incomes
A) shifts the supply curve of gruel leftward.
B) decreases the quantity of gruel supplied.
C) shifts the demand curve for gruel rightward.
D) shifts the demand curve for gruel leftward.
C
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During a period of disinflation the purchasing power of the dollar _____.
Fill in the blank(s) with the appropriate word(s).
In markets with incomplete information, middlemen tend to ________ total economic surplus by ________.
A. reduce; giving misleading information B. increase; matching sellers with buyers who have high reservation prices C. increase; raising prices D. reduce; raising prices
For a country suffering from a "liquidity trap," its government is unable to use standard monetary policy to boost borrowing and spending to move the economy toward its potential real product.
Answer the following statement true (T) or false (F)
Suppose the real money demand function is Md/P = 2400 + 0.2Y - 10,000 (r + ?e).Assume M = 5000, P = 2.0, and ?e = .03. If Y were to increase from 4000 to 5000, then the real interest rate would increase by how many percentage points?
A. 2 B. 4 C. 7 D. 5