If a good is inferior and income increases, then
A. the supply curve will shift to the left.
B. the demand curve will shift to the right.
C. the demand curve will shift to the left.
D. the supply curve will shift to the right.
Answer: C
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If the marginal propensity to consume is 0.85 and there are no imports or income taxes, the expenditure multiplier is equal to
A) 1 ÷ (1 - 0.85 ) = 1 ÷ 0.15 = 1.45. B) 0.85 × the change in autonomous expenditure. C) 0.85 ÷ 1 = 0.85. D) 1 ÷ 0.85 = 1.176. E) 1 - 0.85 = 0.15.
The price of jet fuel falls. This fall shifts the
A) demand curve for airplane trips rightward. B) demand curve for airplane trips leftward. C) supply curve of airplane trips rightward. D) supply curve of airplane trips leftward.
Economists believe that there are many nonmonetary gains from further trade opening. Which of the following is NOT one of those potential gains?
A) Economies of scale from increased production decreases costs. B) Intensified competition lowers prices. C) Governments will be less reliant on tariff revenue. D) Diversification of production lowers risks.
If the price of a good falls and expenditure on the good rises, the demand for the good is _______
A. elastic B. perfectly elastic C. inelastic D. unit elastic