If a college student stays home and watches a Netflix movie for $2 rather than going out to a $15 movie, this is an example of the
A. value effect.
B. income effect.
C. utility effect.
D. substitution effect.
Answer: D
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A consumer is a lender if
A) optimum current consumption is less than current disposable income. B) optimum current consumption is greater than current disposable income. C) current disposable income is greater than future disposable income. D) the consumer's indifference curves are relatively flat.
If a competitive firm cannot earn a profit at any level of output during a given short-run period, then which of the following is FALSE?
A) It will shut down in the short run and wait until the price increases sufficiently. B) It will exit the industry in the long run. C) It will operate at a loss in the short run. D) It will minimize its loss by decreasing output so that price exceeds marginal cost.
The future value of a deposit in a savings account will be larger
a. the longer a person waits to withdraw the funds. b. the higher the interest rate is. c. the larger the initial deposit is. d. All of the above are correct.
Which would tend to reduce the crowding-out effect that occurs when the federal government increases its borrowing to finance a deficit?
A. The expenditures fail to contribute to the development of human capital. B. The deficit financing reduces the profit expectations of business firms. C. The economy is operating at full employment. D. The economy is operating at less than full employment.