When a third party pays a larger and larger share of the purchasing price of a good, economic theory indicates that the
a. demand for the good will decline.
b. consumers of the good will have less and less incentive to economize on its use.
c. suppliers of the good will have a stronger incentive to provide the good at low prices.
d. prices of the good will tend to decline with the passage of time.
B
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When two variables in a graph are related to a third, changing the third causes
A) a movement along the curve. B) a shift of the curve. C) no change in the curve because the third variable isn't on the axes. D) either a shift or a movement in the curve, but more information is needed to determine which occurs. E) None of the above answers is correct.
A higher level of real Gross Domestic Product (GDP) will result if
A. leakage exceeds injections. B. aggregate supply exceeds aggregate demand. C. aggregate demand exceeds aggregate supply. D. total planned real expenditures exceed real Gross Domestic Product (GDP).
A subsidy to buyers has been placed in the market in the graph shown. Why might the government enact such a policy?
A. As a way to encourage consumers to substitute away from the good B. As a way to discourage the production of the good C. As a way to encourage the consumption of the good D. As a way to discourage the consumption of the good
If there is an autonomous increase in spending (a rightward shift in the aggregate demand curve) and the Fed wishes to hold real income constant, then the Fed would:
A) decrease the money supply yielding a leftward shift in the aggregate demand curve. B) increase the money supply yielding a rightward shift in the aggregate demand curve. C) hold the money supply constant. D) none of the above.