Suppose that Family A borrows money when its car breaks down and saves money when the wife receives a holiday bonus from her employer. Suppose that Family B borrows money to buy elaborate birthday presents for the children and spends the husband's holiday bonus on a vacation to Florida. Which of the following is correct?
a. Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on transitory income.
b. Family A's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. Family B's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income.
c. Family A's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. Family B's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income.
d. Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on permanent income.
c
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If a country experiences deflation, its currency will increase in value relative to its trading partners, ceteris paribus
Indicate whether the statement is true or false
Inflation caused by an increase in aggregate spending is referred to as:
A. Cost-push inflation B. Anticipated inflation C. Demand-pull inflation D. Hyperinflation
A successful advertising campaign would likely
a. increase price elasticity of demand by stressing the uniqueness of the product. b. reduce price elasticity of demand by stressing the uniqueness of the product. c. reduce price elasticity of demand by informing consumers of the availability of substitutes. d. not alter the demand curve. e. generally make the demand curve shift inward.
If there is a prolonged recession and, at the same time, technological advances change the skill sets of some jobs and eliminate others, what type of unemployment gets larger?
A. Seasonal. B. Structural. C. Frictional. D. None of the choices are correct.