When real GDP is falling, the economy is experiencing
a. a recession.
b. a financial crisis.
c. an expansion.
d. equilibrium.
e. environmental deterioration.
A
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Bob invests $75 in an investment that has a 50% chance of being worth $100 and a 50% chance of being worth $0. From this information we can conclude that Bob is
A) risk preferring. B) risk neutral. C) risk averse. D) irrational.
A sin tax is an example of:
A. a Pigovian tax. B. government policy increasing total surplus in a market. C. a tax that increases the efficiency of a market. D. All of these statements are true.
Economics is the study of
A. the determinants of preferences. B. nonhuman phenomena. C. scarce resources and unlimited wants. D. the physical sciences.
Answer the following questions true (T) or false (F)
1. If consumers believe the price of tablet computers will increase in the future, this will cause the demand for tablet computers to decrease now. 2. The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a substitute product. 3. If the price of peaches, a substitute for plums, increases the demand for plums will decrease.