If incomes grow during the next year, what will happen in the market for RVs? (Assume that RVs are normal goods.)
What will be an ideal response?
If RVs are normal, an increase in income will lead to an increase in demand. The demand curve will shift to the right. This will increase the equilibrium price of an RV and also increase the equilibrium quantity sold.
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An upward sloping indifference curve defined over two goods violates which of the following assumptions from the theory of consumer behavior?
A) transitivity. B) preferences are complete. C) more is preferred to less. D) all of the above E) none of the above
One unpleasant cure for the U.S. trade deficit of the 1990s would be for foreigners who hold U.S. financial assets to demand
a. lower interest rates to stimulate U.S. growth rates. b. higher interest rates and generate a recession in the United States. c. higher interest rates and generate an appreciation of the dollar. d. lower interest rates and generate a depreciation of the dollar.
A major macroeconomic leakage from the circular flow is:
a. Consumption b. Savings c. Saving d. Gross private domestic investment e. Government spending.
A bank's net worth is:
a. equal to assets plus liabilities
b. sometimes called the owners' equity.
c. equal to assets minus reserves.
d. the same thing as net profits.
e. the amount of interest charged by the bank for short-term loans.