After getting a raise at work, Jennie now regularly buys steak instead of hamburger. Based on this behavior, we can assume:
A. steak is a normal good, and hamburger is an inferior good for Jennie.
B. steak is an inferior good, and hamburger is a normal good for Jennie.
C. steak and hamburger are complementary goods for Jennie.
D. steak and hamburger are normal goods for Jennie.
A. steak is a normal good, and hamburger is an inferior good for Jennie.
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Saving and investment that increase a nation's capital lead to
A) slower growth because there is a lack of consumption. B) a decrease in labor productivity as capital is used to replace labor. C) a decrease in the amount of capital per worker. D) an increase in labor productivity.
Within the AD/AS model, which one of the following adjustments will cause the economy to return to its long-run capacity when output is temporarily greater than the economy's long-run potential?
a. Lower wage rates and resource prices reduce short-run aggregate supply. b. Lower interest rates increase aggregate demand and, thereby, stimulate output. c. Higher wage rates and resource prices reduce short-run aggregate supply. d. A decrease in prices reduces aggregate demand.
A period of expansion in the business cycle ends when
A) real GDP is equal to potential GDP. B) the business cycle reaches its peak. C) the business cycle reaches its trough. D) real GDP is less than potential GDP.
Economist Steve Landsburg has pointed out that Ebenezer Scrooge's change in behavior from miser to spender might actually be detrimental to the economy because
A) Scrooge's miserly saving helped contribute to the production of investment goods rather than consumption goods. B) Scrooge was happiest when he was saving money, and happiness is the key to economic growth. C) saving has to be greater than consumption for the economy to grow. D) Scrooge's consumption habits were more detrimental to the environment than were his earlier saving habits.