What is the benefit of understanding the income and the substitution effects?
A) The income effect might run in the opposite direction of the substitution effect.
B) The income effect always runs in the opposite direction of the substitution effect.
C) The income and substitution effects just offset each other, which explains a lot.
D) The income and substitution effects are proportional to each other.
A
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The interest rate thought to have the most important impact on aggregate demand is the
A) short-term interest rate. B) T-bill rate. C) rate on 90-day CDs. D) long-term interest rate.
If inputs into production cannot be substituted for each other but have to be employed in fixed proportions isoquants are straight, downward-sloping lines
Indicate whether the statement is true or false
The theory of public choice
A. Explains the selfless pursuit of public goals by public servants. B. Examines why the public rejects so many bond referendums. C. Examines how a policy of laissez faire works to allocate resources. D. Emphasizes the self-interest of decision makers and voters.
The textbook points out that rent controls have
A. greatly benefited the homeless. B. attracted increases in low-income housing. C. had no effect on the market for housing. D. benefited upper-income or existing tenants.