The income effect of a price change refers to
A) the change in demand that occurs when both income and price change.
B) the change in demand that occurs when consumer income changes.
C) the change in the quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant.
D) the change in the quantity demanded that results from a change in price, making the good more or less expensive relative to other goods, holding everything else constant.
C
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Real money balances
A. refer to the amounts of nominal money that individuals hold. B. are computed by deflating nominal money assets by the average price level. C. refer to the amounts of American money that an individual holds relative to gold or foreign currencies. D. are measured by currency holdings rather than holdings in checking accounts.
Use the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question.
After trade, at a world price of Pw, total economic surplus equals area(s)
A. A + B + C + D + E + F. B. A + B + C + E + F + J + I. C. D. D. A + B + C + D.
If an increase in one variable causes a decrease in another variable, this is
A. a negative relationship. B. an independent relationship. C. a dependent relationship. D. a direct relationship.
Famines in sub-Saharan Africa:
A. are solely the result of unalterable weather conditions. B. have become less common in recent decades. C. are the result of drought, civil strife, large populations, and inappropriate public policies. D. are solely the result of government policies that overprice agricultural products.