The distinction between a normal and an inferior good is
A. when income increases, demand for a normal good decreases while demand for an inferior good increases
B. normal goods are used for the same purposes while inferior goods are used together
C. when income increases, demand for a normal good increases while demand for an inferior good falls
D. normal goods are used together while inferior good are used for the same purposes
Ans: C. when income increases, demand for a normal good increases while demand for an inferior good falls
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When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
Explain the forces that caused the savings and loan debacle in the latter half of the 1980s
What will be an ideal response?
If the price of chewing gum is represented by P in equation P = 25 - 0.5 QD, then the corresponding quantity of chewing gum demanded is represented by the demand equation
A) QD = 2P - 0.5. B) QD = 0.5P + 25. C) QD = -5 + 10P. D) QD = 50 -2P.
Small differences in annual growth rates accumulate into:
A. Small differences in GDP. B. Large differences in GDP. C. A leftward shift of the aggregate demand curve. D. An increase in population.