When the cross-price elasticity of demand for two goods is a positive number, one can correctly conclude that:
a. the goods are normal goods.
b. the goods are inferior goods.
c. the goods are substitutes.
d. the goods are complements.
e. total revenue will increase when the price increases.
c
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Refer to Figure 10.7. A movement from point C to point B could be caused by
A) an increase in consumer confidence accompanied by a decrease in the target interest rate. B) a decrease in consumer confidence accompanied by an increase in the expected rate of inflation. C) a negative demand shock accompanied by an increase in the term structure effect. D) a positive demand shock accompanied by a decrease in the default-risk premium.
Assume that black beans and rice are staples in the diet of one particular family. How could you tell if these goods were complements, substitutes, or unrelated goods?
a. If the price of black beans rose and the consumption of rice remained the same, they would be substitutes. b. If the price of black beans rose and the consumption of rice increased, they would be substitutes. c. If the price of black beans rose and the consumption of rice decreased, they would be substitutes. d. If the price of black beans rose and the consumption of both goods remained the same, they would be complements. e. There is no way to determine whether these goods are complements, substitutes, or unrelated goods.
Tariffs tend to reduce the volume of imports by
A. Reducing prices of domestically produced goods. B. Making them more expensive to domestic consumers. C. Placing severe quality restrictions on imported goods. D. Setting maximum allowable import limits.
Demand-pull inflation could start with
What will be an ideal response?