Positive economics answers the question, "What ought to be?" Normative economics predicts the consequences of alternative actions, answering the questions, "What is?" or "What will be?"
Answer the following statement true (T) or false (F)
False
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Suppose that Year 2 is the base year. The CPI for Year 1 is approximately
A) 80.0. B) 90.0. C) 100.0. D) 120.0.
Suppose the value of income elasticity of demand for a private college education is equal to 1.5 . This means that:
a. every $1 increase in income provides an incentive for a $1.50 increase in expenditures on private college education. b. every $1.50 increase in income provides an incentive for a $1 increase in expenditures on private college education. c. a 10 percent increase in income causes a 15 percent increase in the quantity of private college education purchased. d. a 15 percent increase in income causes a 10 percent increase in the quantity of private college education purchased. e. a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent.
The U.S. president convinces Congress to fund a national program to land astronauts on Mars. This action, all other things held constant, increases government spending and ______.
a. decreases net exports b. shifts the aggregate demand curve to the right c. causes movement along the aggregate demand curve d. increases consumer saving
The price elasticity of supply measures how
A. responsive the quantity supplied of Y is to changes in the price of X. B. responsive quantity supplied is to a change in incomes. C. easily labor and capital can be substituted for one another in the production process. D. responsive the quantity supplied of X is to changes in the price of X.