When income rises
A. quantity of a normal good demanded rises.
B. demand for a normal good rises.
C. demand for a luxury good falls.
D. demand for an inferior good rises.
Answer: B
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Under a fixed exchange rate system, if the inflation rate of the United States is less than the inflation rate of other nations, the
A) United States will develop a trade surplus. B) dollar will appreciate. C) United States will develop a trade deficit. D) dollar will depreciate.
Comment on the following: "The second welfare theorem says that we can get any efficient allocation to be an equilibrium allocation. If endowments are inequitably distributed in an economy, we can therefore redistribute among people and still get an efficient outcome. As a result, there is no policy trade-off between equity and efficiency."
What will be an ideal response?
The duration of the "short-run"
A) is one year. B) is the same for all goods. C) depends on the relative short-run elasticity of demand and supply for the good. D) depends on how long it takes consumers or firms to adjust for a particular good.
Explain why risk can be insured against but uncertainty cannot
What will be an ideal response?