By drawing a demand curve with price on the vertical axis and quantity on the horizontal axis, economists assume that the most important determinant of the demand for a good is
A) consumer tastes and preferences. B) the quality of the good.
C) the price of the good. D) consumer income.
C
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Lizzie's budget line is shown in the figure above. If the price of a cookie rises, Lizzie's real income in terms of cookies ________ and her real income in terms of magazines ________
A) decreases; increases B) increases; decreases C) decreases; does not change D) increases; does not change
According to the Keynesian view, if real GDP is slowing and the economy appears to be headed for a recession, a reduction in tax rates is
a. highly appropriate because it will stimulate aggregate demand and, thereby, help to strengthen the economy. b. highly inappropriate because it will either reduce the size of the budget surplus or increase the size of the deficit. c. not very important because the "demand stimulus effects" of the tax cut will be largely offset by additional borrowing. d. not very important because the "demand stimulus effects" of lower current taxes will be largely offset by the expectation of higher taxes in the future.
The group that sets the Federal Reserve Systems policy on buying and selling government securities (bills, notes, and bonds) is the:
A. Federal Deposit Insurance Corporation (FDIC). B. Federal Bond Sale Authority. C. Council of Economic Advisers. D. Federal Open Market Committee (FOMC).
Which of the following is one way the Federal Reserve Bank serves the government?
(A) Financing state government projects. (B) Making loans to the government. (C) Minting coins for the government. (D) Selling government securities.