The Slutsky equation shows that, holding the total effect constant, the income effect will be larger for goods that
A) have a smaller substitution effect.
B) make up a larger percentage of a household's budget.
C) have perfectly inelastic demand curves.
D) All of the above.
A
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For much of its history, General Motors was characterized by having versions of the same car with different nameplates, e.g., Chevrolet vs. Cadillac. This business model has seemed less successful in recent years. What might explain this?
A) Consumers have more information concerning costs and quality. B) Consumers have more information concerning costs but not quality. C) Sellers have more information concerning costs but consumers have more information about quality. D) Consumers have less information concerning costs and quality.
At the end of 2007, the government had a debt of about $5,000 billion. During 2007, real GDP grew by about 0.8 percent and inflation was about 2.7 percent. About what is the largest deficit the government could have run without raising the debt-to-GDP ratio?
a. 135 billion b. 143 billion c. 169 billion d. 175 billion
Refer to Figure 13.1. All else equal, an increase in corporate taxes would best be represented by a movement from
A) point A to point B. B) point B to point A. C) point B to point C. D) point C to point B.
The expenditure schedule and the aggregate demand curve show much the same thing, with one crucial difference-the price level. How does the price level affect the two schedules?