What is the difference between a normal good and an inferior good? How does this relate to the demand curve?
What will be an ideal response?
A normal good is one for which demand increases as income increases, and an inferior good is one for which demand decreases as income decreases. Hence, an increase in income causes the demand curve for a normal good to shift to the right, showing an increase in demand; and an increase in income causes the demand curve for an inferior good to shift to the left, showing a decrease in demand.
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The U.S. income-maintenance program consists of two kinds of programs. They are:
A. the minimum wage law and Social Security. B. antidiscrimination law and education and training programs. C. social insurance and public assistance, or "welfare." D. progressive income taxes and transfer payments.
Markets in which the behavior of the firms theoretically leads to an efficient allocation of resources that maximizes the benefits to consumers given the resources available to consumers are
A. monopolistic competition and oligopoly. B. monopoly and oligopoly. C. monopolistic competition and monopoly. D. perfect competition and perfectly contestable.
Under the Exchange Rate Mechanism of the European Monetary System, when the German mark depreciated below its lower limit against the British pound, the Bank of England was required to buy ________ and sell ________,
thereby ________ international reserves. A) pounds; marks; losing B) pounds; marks; gaining C) marks; pounds; gaining D) marks; pounds; losing
When the Fed buys securities
A. it is conducting open market operations. B. it wants to increase the money supply. C. it offers a high price on those securities which drives down interest rates. D. All of the choices are true when the Fed buys securities.