If the price of the good measured on the horizontal axis falls, a consumer's budget line
A) becomes flatter.
B) becomes steeper.
C) shifts rightward and its slope does not change.
D) shifts leftward and its slope does not change.
A
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In the view of the Classical economists, a increase in aggregate demand leads to
A) lower output levels. B) a higher price level. C) higher output levels. D) a lower price level.
You try to explain the number of IBM shares traded in the stock market per day in 2005. As an independent variable you choose the closing price of the share. This is an example of
A) simultaneous causality. B) invalid inference due to a small sample size. C) sample selection bias since you should analyze more than one stock. D) a situation where homoskedasticity-only standard errors should be used since you only analyze one company.
Adam Smith believed that people are guided by
A. the principle "let your conscience be your guide." B. greed. C. the public good. D. an innate sense of fairness.
Suppose the government decides that a particular commodity is a luxury and decides to fix its price above the market-determined price. What implications could this policy have?
What will be an ideal response?