Suppose a consumer only purchases food and clothing, and food is plotted along the horizontal axis of the consumer's indifference map. If the price of food and clothing increase and income does not change, then the budget line changes by rotating:
A) counter-clockwise about the fixed vertical axis intercept.
B) clockwise about the fixed vertical axis intercept.
C) counter-clockwise about the fixed horizontal axis intercept.
D) clockwise about the fixed horizontal axis intercept.
E) none of the above
E
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In the market for bananas, the price is $2.00 a bunch. An increase in the supply of bananas decreases the price of bananas and ________
A) the quantity supplied increases because the price falls B) increases the demand for bananas C) increases the quantity of bananas demanded D) creates a shortage of bananas
The most important factor that influences total spending is
a. the interest rate b. real wealth c. expectations regarding future income d. the income tax rate e. real disposable income
In the latter half of the 1990s, the Department of Housing and Urban Development imposed regulations on Fannie Mae and Freddie Mac, requiring them to
a. extend more mortgage loans to households with low and moderate incomes. b. accept only mortgages with at least a 20 percent down payment. c. tighten lending standards and increase their holdings of low-risk, conventional mortgages. d. extend more mortgage loans to households with middle and high incomes.
When two variables have a positive correlation,
a. they tend to move in opposite directions. b. they tend to move in the same direction. c. one variable will move while the other remains constant. d. the variables' values are never negative.