Suppose that good X is on the horizontal axis and all other goods (measured in dollars) are on the vertical axis in the consumer-choice diagram. If the consumer gains $10 in income, then
a. the new budget line is parallel to and lies 10 units to the left of the old budget line.
b. the budget line shifts up by 10 dollars, with no change in the slope.
c. the vertical intercept of the budget line shifts up by $10, but the horizontal intercept remains unchanged.
d. the slope of the budget line increases by 10 percent.
b. the budget line shifts up by 10 dollars, with no change in the slope.
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According to the Lucas critique, if past increases in the short-term interest rate have always been temporary, then
A) the term-structure relationship using past data will then show only a weak effect of changes in the short-term interest rate on the long-term rate. B) the term-structure relationship using past data will show no effect of changes in the short-term interest rate on the long-term rate. C) one cannot predict the term-structure relationship as it depends on expectations. D) the term-structure relationship using past data will nevertheless show a strong effect of changes in the short-term interest rate on the long-term rate because of a change in the way expectations are formed.
The ________ consumers make decisions about whether to purchase that ________ affected by small changes in price or quality, therefore a quality improvement for these consumers is not profitable.
A. inframarginal; are B. inframarginal; are not C. marginal; are D. marginal; are not
If the federal government were to run a budget deficit, this would:
a. increase the size of the national debt. b. reduce the size of the national debt. c. leave the size of the national debt unchanged. d. increase the national debt only if the government also expands the supply of money.
Refer to the above figure. Profits for this firm are
A. negative. B. zero. C. positive. D. undetermined without more information.