The change in the quantity demanded of a good that results from a change in price making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power.
What will be an ideal response?
Substitution effect
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Which of the following is not an argument made by those who oppose reforming the tax laws to encourage saving?
a. A public budget surplus can raise national saving. b. The substitution effect of a higher return to saving may be about equal to the income effect of a higher return to saving. c. Low-income households save a larger fraction of their income than high-income households. d. Tax cuts might cause a budget deficit.
Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
Use the following choices regarding the various types of unemployment to describe this situation. Joe is looking for work as a machinist after his and most other machinist jobs were eliminated, replaced by computer-operated machines.
A. Frictional unemployment B. Structural unemployment C. Natural unemployment D. Cyclical unemployment
An example of a cooperative game would be
A) oligopoly. B) monopolistic competition. C) a cartel. D) perfect competition.