You purchase both potatoes and gasoline regularly. Your income increases and you purchase more gasoline and less potatoes. This implies that
A. gasoline has a negative substitution effect.
B. gasoline is a normal good.
C. gasoline is an inferior good.
D. potatoes are normal goods.
Answer: B
You might also like to view...
Exporting a good at a price below its cost of production is defined as
a. efficiency b. dumping c. diversification d. retaliation e. tariffs
Using the above figure, if the government levies a new unit tax in this market, S represents the original supply curve, and St represents the after-tax supply curve, then the revenues that the government collects from imposing this tax is represented on this graph by
A. BAEC. B. OAEG. C. CEF. D. OBCG.
If a nation’s productivity grows by 3% rather than 1.5% over many years, what will be the difference in the nation’s standard of living? Explain.
What will be an ideal response?
If the economy is in a liquidity trap, then:
a. fiscal policy can still stimulate the economy through lower interest rates. b. monetary policy cannot stimulate the economy by lowering interest rates. c. the precautionary demand for money is falling. d. all of the above.