Rising prices makes people fell worse off even if their real income has not fallen
What will be an ideal response?
Money illusion
You might also like to view...
Opportunity cost can best be defined as the
A. money cost of a good or service. B. money cost plus interest on money borrowed to buy a good or service. C. cost of the resources used to produce a good or service. D. value of the best alternative forgone when the alternative at hand is chosen.
Command economies are able to achieve greater allocative efficiency than market economies.
Answer the following statement true (T) or false (F)
Nebraska had an unseasonable cold winter requiring more salt for the roads than normal. If the supply does not change what would happen to the market for salt?
A. The increased demand but no change in quantity supplied causes a surplus of salt. B. There will be more suppliers of salt at every price. C. The increased demand but no change in quantity supplied causes a shortage of salt. D. There is no change in the market.
Joseph Gallo poured two glasses of wine from the same bottle but put a more expensive price tag on one glass than on the other. He let people test both and asked which they wanted; most wanted the more expensive glass, not knowing that both had come from the same bottle. This kind of experiment tells us that:
A. people probably want to drink wine for the sense of indulgence it gives them rather than for the taste. B. preferences are given and are not shaped by society. C. people never make rational choices. D. decision making is costless.