A Giffen good is a good for which
a. a decrease in the price decreases the quantity demanded.
b. the income effect outweighs the substitution effect.
c. an increase in the price decreases the quantity demanded.
d. Both a) and b) are correct.
d
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If the cross elasticity of demand is negative, that means the goods
A) have elastic demands. B) have inelastic demands. C) are complements. D) are substitutes. E) are inferior.
The expansionary phase of the business cycle is characterized by
a. decreasing real output and increasing unemployment. b. decreasing real output and declining unemployment. c. increasing real output and increasing unemployment. d. increasing real output and declining unemployment.
According to the circular-flow diagram, if Denny is the owner of a landscaping business and he just received $50 for mowing Mrs. Pendleton's lawn,
a. the $50 represents a cost of production for Denny's firm. b. the $50 represents wages, rent, and profit to Denny's firm. c. Denny acts as a firm who interacted in the markets for factors of production with Mrs. Pendleton. d. Denny acts as a firm who interacted in the markets for goods and services with Mrs. Pendleton.
People who hold well-diversified portfolios of stocks have greatly reduced or eliminated
a. firm-specific risk, and so they do not need to worry about their wealth decreasing as a result of recessions. b. market risk, and so they do not need to worry about their wealth decreasing as a result of recessions. c. firm-specific risk, but still they have reason to worry about their wealth decreasing as a result of recessions. d. market risk, but still they have reason to worry about their wealth decreasing as a result of recessions.