If people regard economic fluctuations as temporary,
a. spending will be less sensitive to changes in income, and the multiplier will be larger.
b. spending will be less sensitive to changes in income, and the multiplier will be smaller.
c. they will be pessimistic about the future.
d. spending will be more sensitive to changes in income.
e. spending will be independent of changes in income.
B
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Money illusion is
A) when people think they are better off when their income increases even though prices have increased by the same amount. B) when people are motivated by self-interest. C) could not exist if the economy did not have competitive markets. D) a basic condition that all classical economists assume people have.
Suppose a person's utility for leisure (L) and consumption (Y) can be expressed as U = Y + L0.5. Assuming a wage rate of $10 per hour, show what happens to the person's labor supply curve when the person wins a lottery prize of $100 per day
What will be an ideal response?
If the centrally planned economy of Rowboat dismantles central controls before institutions such as property rights are in place, instability will most likely result
a. True b. False
The difference between a perfectly competitive firm and a monopolistically competitive firm is that a monopolistically competitive firm faces a:
A. horizontal demand curve and price exceeds marginal cost in equilibrium. B. downward-sloping demand curve and price exceeds marginal cost in equilibrium. C. horizontal demand curve and price equals marginal cost in equilibrium. D. downward-sloping demand curve and price equals marginal cost in equilibrium.