When the price of summer tank tops falls and you buy more of it because it is relatively less expensive, this is called
a) The substitution effect
b) The income effect
c) The net effect of both the substitution effect and the income effect
d) The equilibrium choice for hours worked.
Answer: the substitution effect
You might also like to view...
The concept of exogeneity is important because
A) it clarifies whether or not the variable is determined inside or outside your model. B) maximum likelihood estimation is no longer valid. C) under strict exogeneity, OLS may not be efficient as an estimator of dynamic causal effects. D) endogenous variables are not stationary, but exogenous variables are.
When aggregate expenditure exceeds the level needed to generate a full-employment, noninflationary equilibrium, then a recessionary gap exists
Indicate whether the statement is true or false
The country of Mu has continuous strong economic growth and a persistently steady price level. This situation is most likely the result of aggregate demand growing ________ aggregate supply.
What will be an ideal response?
While oligopolies are generally inefficient, limit pricing may keep prices closer to competitive levels.
Answer the following statement true (T) or false (F)