The consumption function shows the relationship between:
a. planned consumption expenditures and disposable income.
b. permanent income and savings.
c. business inventory and real GDP.
d. aggregate demand and aggregate consumption.
a
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A Consumer Price Index adjustment overcompensates for inflation because it ignores
A) the income effect when relative prices change. B) the substitution effect when relative prices change. C) that some goods are inferior. D) that the substitution effect may offset the income effect.
The main examples of macroeconomic coordination failures are
a. profit declines. b. relative price changes. c. recessions and depressions. d. consumer taste changes.
If real GDP has increased by 3 percent and nominal GDP has increased by 5 percent, then:
A. net factor income is 2 percent. B. inflation is 2 percent. C. depreciation is 2 percent. D. net exports are 2 percent.
Assuming that fish, chicken, pork, and beef are substitutes, suppose that the price of fish has fallen. This will, other things being equal
A. increase demand for chicken, pork, and beef. B. leave demand for chicken, pork, and beef unchanged. C. increase quantity demanded of beef. D. reduce demand for chicken, pork, and beef.