When prices rise, what happens to income?
a. It goes down.
b. It buys less.
c. It rises to meet prices.
d. It is used to buy different things.
Ans: b. It buys less.
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If the Fed sells government bonds in the open market, it will cause:
A) a downward movement along the supply curve for reserves. B) a shift of the supply curve for reserves to the left. C) a shift of the supply curve for reserves to the right. D) an upward movement along the supply curve for reserves.
The people who immediately benefit from a minimum wage are
A) employers who now pay the minimum wage. B) those people who enter the labor force to search for minimum wage jobs. C) the workers who retain their jobs after enactment of the minimum wage. D) everyone, both demanders and suppliers, because the minimum wage benefits everyone. E) all workers.
A source of business risk is a change in
A) technology. B) consumer preferences. C) input prices. D) All of the above
Economists use abstract models because:
A. every economic situation is essentially the same, so specific details are unnecessary. B. they are useful for describing general patterns of behavior. C. computers have allowed economists to develop abstract models. D. every economic situation is unique, so it is impossible to make generalizations.