A consumer's budget constraint is drawn on a graph with the number of sandwiches measured along the horizontal axis and the number of bowls of soup measured along the vertical axis. Hold the consumer's income and the price of a sandwich fixed, and increase the price of a bowl of soup. Describe the effect on the budget constraint
The horizontal intercept is unaffected, and the budget constraint becomes flatter. (The vertical intercept is now lower on the vertical axis.)
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The spending multiplier effect is the result of a movement along the aggregate expenditures (AE) line
a. True b. False Indicate whether the statement is true or false
An export trading company (ETC) works with many manufacturers rather than representing a single manufacturer.
a. true b. false
Which one of the following factors will most likely cause an increase in aggregate demand?
A. An increase in net exports. B. An increase in the real interest rate. C. A decrease in net exports due to falling incomes abroad. D. A technological development that decreases the cost of producing computer chips.
A price ceiling is
A) the lowest price a seller can charge for a good without losing all her customers. B) a legal minimum price that can be charged for a particular good or service. C) a legal maximum price that can be charged for a particular good or service. D) the lowest price a buyer can pay for a good without having to report the purchase to the government.