If households come to believe that permanent income has not changed ________
A) the impact of a change in taxes on spending will be limited
B) they will consume on the basis of their current income
C) their life-cycle will be affected
D) the impact of a given change in taxes on spending will be enhanced
A
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Gruel is an inferior good. Hence, a decrease in people's incomes
A) shifts the supply curve of gruel leftward. B) decreases the quantity of gruel supplied. C) shifts the demand curve for gruel rightward. D) shifts the demand curve for gruel leftward.
A perfectly competitive firm faces a demand curve that is
A) perpendicular to the quantity axis. B) horizontal. C) vertical. D) perfectly inelastic.
Refer to the figure above. In autarky equilibrium, the relative price is given by the slope of the production possibility frontier at point
A) D. B) E. C) F. D) Can't answer without more information.
In an effort to prepare for war, the Defense Department is required by Congress to stockpile helium, once used to provide lift for blimps (phased out in the 1960s). About 100 years of total U.S. usage of helium is in storage. The Pentagon agrees to buy helium from producers at a price above what would otherwise prevail in the marketplace. Is this likely to result in efficiency? Explain