A consumer has $100 to be spent on tables and chairs. If his income increases to $200, the prices of the goods remaining unchanged, his budget constraint:
A) pivots to the left along the vertical axis.
B) pivots to the right along the horizontal axis.
C) shifts to the left.
D) shifts to the right.
D
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The purpose of commodity buffer stocks is
(a) to moderate price fluctuations. (b) to raise commodity prices. (c) to encourage commodity substitution. (d) to guarantee national security.
If the consumption of a good by one person reduces its consumption by others, then the good is
A. nonrivalrous in consumption. B. rivalrous in consumption. C. nonexcludable. D. excludable. E. b and d
When a country has a lower opportunity cost in producing a good than any other country,
A. It necessarily has an absolute advantage in producing the good. B. Consumption possibilities will increase with specialization and trade. C. It has favorable terms of trade in producing the good. D. Production possibilities are no longer limited.
Jack recently took out a loan from Diane at an interest rate of 5 percent. Diane expected this year's inflation rate to be 2 percent and the real interest rate to be 3 percent. The loan is due at the end of this year. Complete the table below by computing the real interest rate for each possible inflation rate. For each situation, determine whether the unexpected inflation level benefits Jack or Diane.
What will be an ideal response?