After the price of milk increases, Liza buys more eggs and less hotdogs. For Liza
A. milk, eggs, and hotdogs are all substitutes.
B. milk and eggs are substitutes, and milk and hotdogs are complements.
C. milk and eggs are complements, and milk and hotdogs are substitutes.
D. milk, eggs, and hotdogs are all complements.
Answer: B
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In new growth theory, growth in real GDP per person occurs because
i. human capital grows indefinitely. ii. technology advances as a result of choices individuals make. iii. profit incentives encourage technological change. A) i only B) ii only C) iii only D) both i and iii E) i, ii, and iii
Small pizza parlors exist in just about every town. Anyone can open a pizza parlor, and the pizzas from one parlor typically have different tastes and sizes than pizzas from another parlor. Thus, the pizza industry is an example of
A) perfect competition. B) monopoly. C) oligopoly. D) monopolistic competition.
Suppose Congress increased spending by $100 billion and raised taxes by $100 billion to keep the budget balanced. What will happen to real equilibrium GDP?
A) Real equilibrium GDP will fall. B) Real equilibrium GDP will rise. C) Real equilibrium GDP will initially rise, but then fall below its previous equilibrium value. D) There will be no change in real equilibrium GDP.
According to the life-cycle hypothesis, if the average person expects to live another 48 years, the short-run MPC out of unexpected changes in income is
A) 0.52. B) 0.48. C) 0.9792. D) 0.0208.