If a decrease in income results in an increase in the quantity demanded for a product, the product is ________, and the value of the income elasticity of demand is ________.
A. a normal good; positive
B. a normal good, negative
C. an inferior good; positive
D. an inferior good; negative
Answer: D
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Price controls:
a. are always popular with consumers because they lower prices. b. create shortages. c. increase producer surplus because firms can now sell a greater quantity of a good at a lower price. d. are necessary to preserve equity.
Assuming that soybeans and tobacco can both be grown on the same land, a decrease in the price of tobacco, other things being equal, causes a(n):
a. rightward shift of the supply curve for tobacco. b. upward movement along the supply curve for soybeans. c. rightward shift in the supply curve for soybeans. d. leftward shift in the supply curve for soybeans.
A classical economist believes that
A) if the economy was left alone, it would rarely operate at full employment. B) the economy is self-regulating and always at full employment. C) the economy is self-regulating and will normally, though not always, operate at full employment if monetary policy is not erratic. D) the economy is self-regulating and will normally, though not always, operate at full employment if fiscal policy is not erratic.
In the 2008-09 recession, the government deficit
A) stayed roughly constant. B) decreased. C) increased. D) would have increased if the government had intervened.