Which of the following statements about the substitution effect of a price change is true?
a. It is caused by a change in relative prices.
b. It affects the consumer's ability, rather than willingness, to purchase a good.
c. It assumes that the consumer substitutes more expensive goods for cheaper ones when income increases.
d. It is usually equal to the income effect.
e. It may cause the consumer to buy less of the good when its price falls.
A
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Which of the following occurs while moving along a short-run aggregate supply curve?
A) The money wage rate and the price level change by the same percentage. B) The money wage rate changes and the price level is constant. C) The price level changes and the money wage rate is constant. D) Neither the price level nor the money wage rate changes.
During the last tax year you lent money at a nominal rate of 6 percent. Actual inflation was 1 percent, but people had been expecting 1.5 percent . This difference between actual and expected inflation
a. transferred wealth from the borrower to you and caused your after-tax real interest rate to be 0.5 percentage points higher than what you had expected. b. transferred wealth from the borrower to you and caused your after-tax real interest rate to be more than 0.5 percentage points higher than what you had expected. c. transferred wealth from you to the borrower and caused your after-tax real interest rate to be 0.5 percentage points lower than what you had expected. d. transferred wealth from you to the borrower and caused your after-tax real interest rate to be more than 0.5 percentage points lower than what you had expected.
Which statement is true of the market supply curve?
A. It is the horizontal summation of the upward sloping portion of the AVC function of all firms in the industry. B. One must know the marginal cost information of firms in order to construct a supply function. C. It is the vertical summation of all the individual supply curves. D. In perfect competition the slope of the curve is horizontal.
If on Monday $1 = 146 Japanese yen and on Friday $1 = 147 yen, the dollar appreciated and the yen depreciated
a. True b. False