Why can't all goods be inferior?
What will be an ideal response?
If all goods were inferior, an increase in income would lead to a decline in the quantity demanded for all goods. This, however, would leave the consumer below the budget line and therefore not achieving the highest utility possible.
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The main determinant of how quickly expected inflation adjusts to changes in monetary policy is
A) the slope of the Phillips curve. B) the slope of the short-run aggregate supply curve. C) the credibility of the central bank. D) the degree of indexation in the economy.
Suppose milk and cereal are compliments and the demand for milk is Qdm = 40 - 6Pm - 2Pc, where Qdm stands for millions of gallons of milk demanded, Pm stands for the price of milk and Pc stands for the price of cereal. The supply of milk is Qsm = 6Pm - 8, where Qsm stands for millions of gallons of milk supplied. The demand and supply of cereal are Qdc = 90 - 5Pc - Pm and Qsc = 5Pc - 10, respectively, where Qdc stands for millions of boxes of cereal demanded and Qsc stands for millions of boxes of cereal supplied. Suppose the government imposes a $2.00 per gallon tax on milk. In the new general equilibrium:
A. the price of milk and the price of cereal are both higher. B. the price of milk is higher and the price of cereal is lower. C. the price of milk is lower and the price of cereal is higher. D. the price of milk and the price of cereal are both lower.
E-cash cards are considered a major portion of the modern money supply
a. True b. False Indicate whether the statement is true or false
The reason economists include only the value of final goods and services when they calculate GDP is that intermediate goods:
A. do not add to economic welfare. B. do not create value added. C. would be double counted otherwise. D. have no social value.