If the income elasticity of demand for a good is negative, this implies that
a. only the poor will buy the good.
b. as incomes fall, less will be spent on the good.
c. as incomes rise, the demand for the good will fall.
d. the good does not obey the law of demand.
C
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What affects the price elasticity of demand for a monopolist's product?
What will be an ideal response?
An automatic stabilizer is a feature of the economy that
a. makes prices "sticky." b. reduces its sensitivity to shocks. c. maximizes its volatility. d. automatically reduces recessionary trends.
The real balance effect helps to explain "a change in
A) aggregate demand." B) the quantity demanded of Real GDP." C) aggregate supply." D) the quantity supplied of Real GDP."
Assume that the size of the underground economy increases both absolutely and relatively over time. As a result:
A. real GDP will rise more rapidly than nominal GDP. B. GDP will tend to increasingly understate the level of output through time. C. GDP will tend to increasingly overstate the level of output through time. D. the accuracy of GDP will be unaffected through time.