If an increase in the price of good X causes the demand for good Y to decrease, this indicates that
a. X and Y are complements.
b. X and Y are substitutes.
c. X and Y are unrelated.
d. the demand for X is elastic, but the demand for Y is inelastic.
A
You might also like to view...
Planned investment spending is higher
A) when real interest rate is higher. B) during financial frictions. C) when businesses are optimistic. D) all of the above. E) A and C.
To say that isoquants are convex is to say that
A) the marginal rate of technical substitution falls as labor increases. B) capital and labor are perfect substitutes. C) labor, but not capital, is subject to the law of diminishing marginal returns. D) there are constant returns to scale.
The "invisible hand" using Adam Smith's terminology refers to
a. government control of the market. b. market forces working through the price mechanism. c. the money supply that serves to keep the economy working smoothly. d. the role of innovation in maintaining a steady rate of growth. e. "behind-the-scenes" policy making to influence how markets allocate scarce resources.
Autonomous consumption is defined as:
a. the level of consumption that depends only on the exchange rate. b. the consumption expenditures incurred by the government. c. the level of consumption that does not depend on income. d. an equilibrium condition that needs to be met for the aggregate expenditure model to work. e. the part of consumption that is related to investment.