If a person has money in a bank account that pays 4% interest, but inflation rises to 5%, then the real rate of return for the money invested in that bank account is
a. 1%.
b. -1%.
c. 2%.
d. 9%.
b. -1%.
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Positive analysis can be described as
A) the study of whether people respond to positive incentives. B) the study of whether people respond to negative incentives. C) a value-free approach to inquiry. D) a study that is not tested empirically.
An extreme case where either the quantity demanded (Qd) or supplied (Qs) changes by an infinite amount in response to any change in price is called:
a. perfect elasticity. b. imperfect elasticity. c. strong elasticity. d. weak elasticity.
When there is reason to think that the existing structure of incentives will cause individuals in the market to act in ways that are inconsistent with ideal economic efficiency, economists say that
a. market failure is present. b. democratic political decision-making will lead to the ideal efficient outcome. c. government action, however well intended, cannot improve the situation. d. government failure is present.
If both prices decreases by 50%,
A) budget constraint will be unchanged. B) slope of the budget constraint will increase. C) slope of the budget constraint will decrease. D) budget constraint will shift outward in a parallel fashion.