Answer the following questions true (T) or false (F)
1. The income effect of a price increase for a Giffen good outweighs the substitution effect.
2. The demand curve for an inferior good can never be downward sloping.
3. The demand curve for a luxury good is upward sloping.
1. TRUE
2. FALSE
3. FALSE
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If the economy is on the LM curve, but is to the left of the IS curve, aggregate output will ________ and the interest rate will ________
A) rise; rise B) rise; fall C) fall; rise D) fall; fall
What are some of the solutions for a hold-up problem?
a. Mergers b. Contracts c. Exchange of ‘hostages' d. All the above
If Sam's manufacturing plant is in a perfectly competitive labor market where the current wage is $14 per hour, his firm can expect to drive up wages if it expands its operations by 50%
Indicate whether the statement is true or false
Which of the following transactions would be included in this year's GDP for the United States?
a. Deion sends $100 to a hotel in Costa Rica as a deposit for his vacation. b. Deion buys a travel guide written by a Costa Rican woman living in the United States. c. Deion buys a shirt while on vacation in Costa Rica. d. Deion spends money in an American-owned restaurant in Costa Rica.