"Income elasticity of demand is always positive." Do you agree or disagree? Explain
What will be an ideal response?
Disagree. Income elasticity of demand can be positive or negative. For normal goods, an increase in income results in an increase in demand. For inferior goods, however, an increase in income results in a decrease in demand.
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Lemon laws __________ the __________ problem in the used car market.
A. are meant to reduce; adverse selection B. are meant to reduce; moral hazard C. unintentionally worsen; adverse selection D. unintentionally worsen; moral hazard
If British real GDP rose relative to U.S. real GDP, there would be
a. a rightward movement along the supply of British pounds curve in the dollar-pound market b. a leftward movement along the supply of British pounds curve in the dollar-pound market c. a rightward shift of the supply of British pounds curve in the dollar-pound market d. a leftward shift of the supply of British pounds curve in the dollar-pound market e. the tendency for the supply of British pounds curve to become flatter in the dollar-pound market
A chart of the ratio of national debt to GDP from 1915 to 2014 would show
a. significant increases from 1945 to 1975. b. significant increases during World Wars I and II. c. a larger value in 1975 compared to 1945. d. significant increases from 1995 to 2003.
If after a country experiences capital flight, people become more confident about the safety of its assets, then in that country
a. the real exchange rate and the real interest rate will rise. b. the real exchange rate will rise and the real interest rate will fall. c. the real exchange rate will fall and the real interest rate will rise. d. the real exchange rate and the real interest rate will fall.