Inferior goods have an income elasticity of demand that is:
a. positive.
b. negative.
c. 0.
d. greater than 1 in absolute value.
e. equal to 1 in absolute value.
b
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Suppose the current account has a value of $500,000 and the financial account has a value of $525,000. The value of the capital account is ________.
A. $25,000 B. -$1,025,000 C. $1,025,000 D. -$25,000
The Gramm-Rudman-Hollings Act of 1985 was designed to set a timetable to
a. reduce the national debt to zero b. replace the progressive income tax with a flat-rate tax c. make Social Security fiscally sound d. replace the Social Security tax with a value-added tax e. reduce deficit spending
Duesenberry's relative income hypothesis is based on the belief that consumption spending
a. depends on current income b. is rooted in status c. is based on transitory income d. depends on permanent income e. is based on absolute income
If Callum is consuming his utility maximizing bundle and the price of one good rises, what happens to the marginal utility per dollar spent on this good (MU/P), and what should Callum do?
A) MU/P has increased and Callum should buy more of this good. B) MU/P has increased and Callum should buy less of this good. C) MU/P has decreased and Callum should buy more of this good. D) MU/P has decreased and Callum should buy less of this good.