If the stock market falls by 25 percent next year and remains down, what is most likely to happen to the consumption function?
a. It will shift upward.
b. It will shift downward.
c. It will not shift, but people will move downward along the consumption function.
d. It will not shift, but people will move upward along the consumption function.
b
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Figure 10-4
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Figure 10-4 shows the industry’s supply and demand curves in panel (1) and the cost curves of a firm in the industry in panel (2). At S3, the firm is
A. going to shut down. B. incurring losses. C. earning zero economic profits. D. earning economic profit greater than zero.
Which of the following is true?
a. Anticipated inflation is an increase in the price level that comes as a surprise, at least to most individuals. b. Unanticipated inflation is a change in the price level that is widely expected. c. Decision makers are generally able to anticipate slow steady rates of inflation with a fairly high degree of accuracy. d. Inflation will increase the prices of goods and services that households purchase but not the wage rates of workers.
If you owned a small farm, which of the following would most likely be a fixed cost of production in the short run?
A. Hail insurance B. Harvest labor C. Seed D. Fertilizer
Why is inflation unpopular?
a. It makes financial planning more difficult. b. It leads to shortages in the economy. c. It increases interest on loans. d. It leaves too much time for production.