If the real interest rate falls, then the:
A. Investment schedule will shift upward
B. Investment schedule will shift downward
C. Point moves along the investment schedule to the right
D. Consumption schedule will shift downward
A. Investment schedule will shift upward
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Which of the following is NOT a determinant of the price elasticity of demand?
A) the availability of potential substitutes B) the share of the budget spent on the item C) the time the consumer has to adjust to the price change D) the cost to produce the product
_____ occurs when unobservable qualities are valued incorrectly because of a lack of information
a. Moral hazard b. Adverse selection c. Conspicuous consumption d. Marginal selection e. Statistical discrimination
The main argument in favor of the existence of a natural rate of unemployment in the long run focuses on what argument?
A. Wages will always adjust to make the long-run unemployment rate zero percent. B. The government cannot affect inflation in the long run. C. Workers refuse to be unemployed in the long run. D. Workers will adjust their inflationary expectations in the long run so that unemployment is unrelated to inflation. E. Firms need to be at full employment in the long run.
According to the substitution effect, a drop in price increases real income (purchasing power), and if the good is normal, consumers will respond by buying more of the good in question. Thus a drop in price increases quantity demanded
Indicate whether the statement is true or false