Refer to the graph below. Assume the consumer has an income of $100, the price of X is $2 and the price of Y is $1. According to the graph, the income effect of a decrease in the price of X from $2 to $1 is equal to: 
A. 20
B. 5
C. 25
D. 30
Answer: B
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To combat a recession with discretionary fiscal policy, Congress and the president should
A) decrease taxes to increase consumer disposable income. B) decrease government spending to balance the budget. C) lower interest rates and increase investment by increasing the money supply. D) raise taxes on interest and dividends, but not on personal income.
According to the Monetarist view, the impact of expansionary monetary policy will be:
A. the same in the long run as in the short run. B. the same regardless of whether the effects of the policy are anticipated or unanticipated. C. a higher price level (inflation). D. a decrease in short-run prices and an increase in long-run prices.
Figure 9.3 represents the market for used refrigerators. Suppose buyers are willing to pay $300 for a plum (high-quality) used refrigerator and $100 for a lemon (low-quality) used refrigerator. If buyers believe that 50% of used refrigerators in the market are lemons (low quality), how many lemons (low quality) will be supplied by sellers?
A. 50 B. 125 C. 175 D. 250
Which of the following would not be included in M1?
A. money market accounts B. checking accounts C. demand deposits D. traveler's checks