The production possibilities curve can shift inward when
A. a country experiences a natural disaster.
B. employment increases.
C. the stock of productive capital rises.
D. production increases.
Answer: A
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In the real business cycle model, a persistent increase in total factor productivity
A) increases the real wage and increases the price level. B) increases the real wage and decreases the price level. C) decreases the real wage and increases the price level. D) decreases the real wage and decreases the price level.
If the income elasticity of demand for a good is positive, the good is a normal good
a. True b. False Indicate whether the statement is true or false
An inferior good is one that
a. people consume if their income falls b. people consume more of if their income falls c. people never consume d. people consume if their income rises e. people consume more of if their income rises
Refer to the graph below. Assume the consumer has an income of $100, the price of X is $2 and the price of Y is $1. According to the graph, the income effect of a decrease in the price of X from $2 to $1 is equal to: 
A. 20 B. 5 C. 25 D. 30