Refer to the information provided in Figure 6.7 below to answer the question(s) that follow.
Figure 6.7Refer to Figure 6.7. Along budget constraint AB, the price of good X is $10 and the price of good Y is $12. If the price of X increases to $15, the budget constraint will
A. pivot in at point A.
B. pivot out at point A.
C. pivot in at point B.
D. shift in parallel to AB.
Answer: C
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Suppose that Nepal invests less in new factories and equipment than does the United States. This will likely cause:
A. The U.S.'s production possibilities curve to shift inward faster than Nepal's. B. Nepal's production possibilities curve to shift outward faster than the U.S.'s. C. The U.S.'s production possibilities curve to shift outward faster than Nepal's. D. Nepal's production possibilities curve to shift inward faster than the U.S.'s.
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
Countercyclical fiscal policy has a serious problem with
a. the timing of its enactment and impact. b. the easy reversibility of policy. c. the tendency of the Federal Reserve to immediately counter Congressional action. d. the courts as it has been held to be unconstitutional. e. Presidential executive orders.
An increase in the price of gasoline above equilibrium will
A. Shift the gasoline supply curve to the right. B. Cause a shortage of gasoline. C. Cause a surplus of gasoline. D. Shift the gasoline demand curve to the right.