When the price of a good changes, the amount of that good that buyers wish to buy changes:
A. because of both the substitution and the income effects.
B. only if the substitution effect and the income effect do not cancel out each other.
C. solely because of the income effect.
D. solely because of the substitution effect.
Answer: A
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Hyperinflation
A) occurs in the United States during each business cycle. B) has never occurred in the United States. C) is a period of time when inflation exceeds 20 percent per year. D) happens in all countries at some time during their business cycle. E) occurs only in theory, never in reality.
The real wage rate will fall if the
A) labor supply curve shifts rightward and the labor demand curve does not shift. B) labor supply curve shifts leftward and the labor demand curve does not shift. C) labor demand curve shifts rightward and the labor supply curve does not shift. D) labor demand curve shifts rightward more than the labor supply curve shifts rightward.
When a country that imports a particular good imposes an import quota on that good,
a. consumer surplus increases and total surplus increases in the market for that good. b. consumer surplus increases and total surplus decreases in the market for that good. c. consumer surplus decreases and total surplus increases in the market for that good. d. consumer surplus decreases and total surplus decreases in the market for that good.
The barter system is rarely used today because: