The importance of the ceteris paribus assumption is that it:
a. allows one to separate normative economic issues from positive economic ones
b. allows one to generalize from the whole to the individual.
c. allows one to analyze the relationship between two variables apart from the influence of other variables.
d. allows one to hold all variables constant so the economy can be carefully observed in a suspended state.
c
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With an income elasticity of demand of 0.5, cigarettes are an example of
a. a normal good b. an inferior good c. irrational demand d. complements to health care e. unitary elasticity
Oligopolistic firms never collude because they have almost no incentive to do so
a. True b. False Indicate whether the statement is true or false
The FE curve has a
A. positive slope because a decrease in domestic interest rates leads to capital outflows causing a surplus in the official settlements balance. An increase in output levels is thus needed to reduce that surplus. B. negative slope because an increase in domestic interest rates leads to capital inflows causing a surplus in the official settlements balance. A decrease in output levels is thus needed to reduce that surplus. C. negative slope because an increase in domestic interest rates leads to capital outflows causing a deficit in the financial account balance. An increase in output levels is thus needed to reduce that deficit. D. positive slope because an increase in domestic interest rates leads to capital inflows causing a surplus in the financial account balance. An increase in output levels is thus needed to reduce that surplus.
Consider the above figure. At a price level of 120
A. total planned real expenditures exceed total planned production. B. total planned production exceeds total planned expenditures. C. inventories would begin to accumulate. D. prices would fall.