An increase in consumer income will
A. shift out the budget constraint and increase the consumption of both goods, if they are normal goods.
B. pivot the budget constraint on the axis with the good that has the higher price.
C. shift the budget constraint and increase its slope.
D. reduce consumption of all normal goods.
Answer: A
You might also like to view...
A budget surplus occurs when ________
A) government spending exceeds tax revenue B) tax revenue exceeds government spending C) imports exceed exports D) exports exceed imports
If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then the price elasticity of demand is equal to:
A. 2. B. 0.05. C. 0.5. D. 5.
A fiscal policy action to close an expansionary gap is to:
A. increase the marginal propensity to consume. B. increase taxes. C. increase government purchases. D. increase transfer payments.
ItemBillions of DollarsCheckable Deposits$2,000Small Time Deposits350Currency Held by the Public80Savings Deposits, Including Money-Market Deposit Accounts1,300Money-Market Mutual Funds Held by Individuals600Money-Market Mutual Funds Held by Businesses700Refer to the above table. The size of the M2 money supply is:
A. $3,730. B. $4,470. C. $4,330. D. $3,980.