Other things constant, an increase in consumer income will
a. shift the demand curve for automobiles to the left.
b. shift the demand curve for automobiles to the right.
c. cause a movement along the demand curve for automobiles, but it will not shift the demand curve.
d. lead to a reduction in the supply of automobiles.
B
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In a one-period economy, real consumption
A) is always less than disposable income. B) is typically greater than disposable income. C) is exactly equal to disposable income. D) can be greater than, less than, or equal to disposable income.
The idea that aggregate price levels do not affect real outcomes in the economy is called the:
A. neutrality of money. B. aggregate price theory. C. neutrality of prices. D. real output theory.
Externalities cause the market mechanism to allocate goods and resources inefficiently because
a. nonconsenting third parties are generally not hurt by externalities. b. producers and consumers ignore signals given by the competitive market. c. prices are always higher than they should be. d. competitive markets fail to give producers and consumers correct price signals.
Government bureaus are likely to be very inefficient because:
a. they are overly concerned with profit-maximization b. they face intense competition c. they seek to fulfill their mission and then dissolve d. none of the above