Explain the difference between a normal good and an inferior good
What will be an ideal response?
A normal good is something for which the demand increases when income rises and the demand decreases when income falls. An inferior good is something for which the demand decreases when income rises and the demand increases when income falls.
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Suppose that an increase in capital per hour worked from $15,000 to $20,000 increases real GDP per hour worked by $500
If capital per hour worked increases further to $25,000, by how much would you expect real GDP per hour worked to increase if there are diminishing returns? A) by less than $500 B) by more than $500 but less than $5,000 C) by exactly $500 D) by more than $5,000 but less than $20,000
In 2008, Timothy Geithner referred to investment banks, money market mutual funds, hedge funds, and other financial firms engaged in similar activities as the
A) shadow banking system. B) securitization market. C) commercial banking system. D) secondary market.
In most cases, the higher is the quality of the collateral for a loan is
A) the higher is the interest rate. B) the lower is the interest rate. C) the riskier is the loan. D) the greater is the handling charge for the loan.
Which of the following statements correctly defines demand?
a. peoples' willingness to supply goods at specific prices b. the willingness and ability of people to buy goods and services at different prices c. people's expectations of lower prices of goods and services d. producer's expectations of selling more goods e. the interaction of people's willingness to buy and sell goods