Which of the following statements best describes an inferior good?
A) An inferior good is a good whose quantity supplied always exceeds the quantity demanded.
B) An inferior good is a good whose demand decreases with an increase in consumers' income.
C) An inferior good is a good that is sold at a subsidized price.
D) An inferior good is a good that is rationed by the government.
B
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Overproduction results in
A) external costs. B) external benefits. C) deadweight loss. D) super-efficiency. E) the marginal benefit of the last unit produced being larger than the marginal cost.
The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is
A) 5% higher in year 1 than in year 2. B) 105% higher in year 1 than in year 2. C) 105% higher in year 2 than in year 1. D) 5% higher in year 2 than in year 1.
A European option differs from an American option in that it may be exercised
A) only on the spot date. B) only on the expiration date. C) only on the future date. D) on any date.
The Fed's purchase of U.S. government securities constitutes a(n):
a. contractionary policy because it lowers the amount of total reserves in the banking system. b. contractionary policy because it lowers the amount of excess reserves in the banking system. c. expansionary policy because it raises the amount of total reserves in the banking system. d. expansionary policy because it lowers the amount of total reserves in the banking system. e. expansionary policy because it raises the amount of required reserves in the banking system.