The Callaway family owns a small bait and tackle shop in a resort town in Wisconsin. An economic recession reduces the number of tourists for one summer, which reduces the family's income for that year. For the Callaway family, their
a. transitory income for the year of the recession likely exceeds their permanent income.
b. permanent income likely exceeds their transitory income for the year of the recession.
c. permanent income will be more affected by the recession than their transitory income.
d. Both a and c are correct.
b
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If the real interest rate increases
A. there will be a movement upward along the investment demand curve. B. the investment demand curve will shift to the left. C. the investment demand curve will shift to the right. D. there will be a movement downward along the investment demand curve.
In a small economy, gross investment is $1,500, consumption spending is $6,000, net investment is $200, government spending is $1,500, exports are $2,000 and imports are $1,000. What is GDP for this economy?
A) $10,700 B) $10,300 C) $10,200 D) $10,000
From an initial long-run equilibrium, if aggregate demand grows faster than long-run and short-run aggregate supply, then Congress and the president would most likely
A) decrease tax rates. B) decrease government spending. C) decrease the required reserve ratio. D) decrease oil prices.
Which of the following is an example of the law of demand?
A) A decrease in the price of milk is followed by an increase in milk purchases. B) A decrease in the price of milk is followed by a decrease in milk purchases. C) An increase in the price of milk has no effect on the amount of milk purchased. D) The amount of milk purchased increases when the price is constant.