Suppose good X is a normal good. Then a decrease in income would lead to
A. a movement along the demand curve.
B. no shift of the demand curve.
C. an outward shift of the demand curve.
D. an inward shift of the demand curve.
Answer: D
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Government spending has no effect on resource allocation since the government simply engineers a transfer of private goods and services from one group in the economy to some other group
Indicate whether the statement is true or false
This graph demonstrates the domestic demand and supply for a good, as well as the world price for that good.
According to the graph shown, if this economy were open to free trade, domestic producers would produce how many units?
A. 60 B. 90 C. 115 D. 150
Which of the following could be a cause of consumption decreasing?
A. Wealth increases. B. Real income increases. C. Expected future income increases. D. Interest rates increase.
Which statement is true?
A. The federal budget deficit reached a peak in 1992 and has been declining since then. B. The federal budget deficit in fiscal year 1997 was at a record high. C. Because we ran federal budget surpluses since 1998, the national debt is falling. D. The federal government ran budget surpluses from 1998 to 2001, but returned to deficits since 2002.