Jacob buys less soda when the price of soda rises 10 percent, while the prices of all other goods also rise 10 percent. Jacob is
A) behaving in accordance with classical economic theory.
B) worrying too much about a coming recession.
C) suffering from money illusion.
D) paying too much attention to changes in relative prices.
C
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During its run on Broadway, the play The Producers regularly sold out all available tickets at the St. James Theater. The theater could have raised ticket prices from $75 to $125 and still sold all available tickets but chose not to do so
The best explanation for this decision is A) theater owners do not want to raise their prices on weekends, when demand is high, and then have to lower prices during the week, when demand is lower. B) firms sometimes give up profits in the short run to keep their customers happy and increase their profits in the long run. C) theater owners are unaware of the elasticity of demand for Broadway shows. D) theater owners are not motivated to maximize their profits.
Market interest rates are determined by
a. banks b. Wall Street c. the demand for loanable funds d. the supply of loanable funds e. the demand for and supply of loanable funds
Which of the following statements is most correct?
A. Reserves are assets of the central bank and liabilities of the commercial banks. B. Reserves are assets of the commercial banks and liabilities of the central bank. C. Reserves are assets of the central bank and liabilities of the U.S. Treasury. D. Reserves are liabilities of the commercial banks and assets of the U.S. Treasury.
Which of the following is the best measure of size of government as a share of the economy?
A) total government expenditures as a percentage of GDP B) the supply of money as a percentage of GDP C) public consumption plus private investment as a percentage of GDP D) private consumption as a percentage of Gross Domestic Product