The fact that consumers will purchase more of a good that has become relatively cheaper
A) is called the nominal income effect.
B) is called the substitution effect.
C) leads to an upward sloping demand curve.
D) leads to negative marginal utility.
Answer: B
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Why must the current account and the financial account sum to zero? (Assume the capital account is zero.)
What will be an ideal response?
Economic growth can be pictured in a production possibilities frontier diagram by
A) making the production possibilities frontier more bowed out. B) making the production possibilities frontier less bowed out. C) shifting the production possibilities frontier outward. D) shifting the production possibilities frontier inward.
A year-long drought that destroys most wheat crops for the season would shift the:
A. short-run aggregate supply curve only. B. aggregate demand curve only. C. aggregate demand curve, and the short-run aggregate supply curve would shift in response. D. short-run aggregate supply curve and the long-run aggregate supply curve.
Which of the following falls during a boom?
A) Investment B) Gross Domestic Product C) Unemployment D) Consumption