When the price of one good decreases, the associated substitution effect is represented by a:
A. move along a given indifference curve holding real income constant.
B. move from one indifference to a lower indifference curve since real income is now lower.
C. move from one indifference to a higher indifference curve since real income is now higher.
D. move along a given indifference curve since real income increases.
Answer: A
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Suppose that: 1 ) The interest on a one-year bond today is 3%; 2 ) The interest on a one-year bond starting one year from now is expected to be 4% per year; 3 ) The interest on a one-year bond starting two years from now is expected to be 5% per
year; 4 ) The risk premium on a two-year bond is 0.5%; and 5 ) The risk premium on a three-year bond is 1.0%. Use that information to answer the following questions. a) According to the expectations theory, what is the interest rate today on a two-year bond? Show your work. b) According to the expectations theory, what is the interest rate today on a three-year bond? Show your work. c) Plot the yield curve.
U.S. industry is much more concentrated than other leading industrial nations of the world
Indicate whether the statement is true or false
Most economists agree that
a. fiscal policy is a more effective stabilization tool than monetary policy. b. it is difficult to time discretionary changes in macro-policy in a manner that will promote stability. c. monetary policy should focus on reducing unemployment, while fiscal policy should focus on the control of inflation. d. discretionary macro-policy can easily be instituted in a manner that will promote economic stability.
According to the World Bank, nearly 40 percent of the people on earth subsist on incomes of less than $3 per day.
Answer the following statement true (T) or false (F)