The real-income effect of a price change is most significant when
A. the good under consideration constitutes a major portion of the consumer's budget.
B. the marginal utility per dollar spent on the last unit is high.
C. the substitution effect is significant too.
D. the substitution effect is insignificant.
Answer: A
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The income effect of a decrease in the price of macaroni and cheese (assume this is an inferior good) results in
A) an increase in the demand for macaroni and cheese. B) an increase in the quantity of macaroni and cheese demanded. C) a decrease in the quantity of macaroni and cheese demanded. D) a decrease in the demand for macaroni and cheese.
Modigliani's consumption function differs from both Friedman's and Keynes' function in which of the following?
A) It is based on forward looking expectations. B) It is based on disposable income received over time. C) It is based on the value of assets accumulated over time. D) It is based on disposable income or permanent income.
The unemployment rate is interpreted as the percentage of the
A. able-bodied population who are not working. B. labor force that are not employed. C. workforce that have been laid off. D. adult population who are unemployed.
The duration of unemployment tends to rise when
A) business activity goes into a downturn. B) business activity starts back up after a long period of decline. C) people leave their jobs rather than lose their jobs. D) the number of entrants exceeds the number of reentrants.