Refer to the information provided in Figure 3.6 below to answer the question(s) that follow.
?Figure 3.6Refer to Figure 3.6. The number of DVDs Isabel rents per week increases from 4 to 7. This is caused by
A. a decrease in the price of popcorn, which is a complement to DVDs.
B. a decrease in the rental price of DVDs.
C. an increase in income if DVDs are a normal good.
D. either A or B
Answer: B
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Reducing the marginal tax rate on income will
A) raise the return to entrepreneurship and encourage the opening of new businesses. B) increase the after-tax return on saving, and encourage saving. C) reduce the tax wedge faced by workers and increase labor supplied. D) All of the above are correct.
The kinked demand curve model helps to explain:
a. fluctuations of prices in pure competition b. stabilities observed in prices in oligopolistic industries c. fluctuations observed in prices in oligopolistic industries d. all of the above e. none of the above
In the short run, a decrease in wage rates, ceteris paribus, shifts the
A) AD curve to the right, causing equilibrium price level to rise and equilibrium Real GDP to increase. B) AD curve to the left, causing equilibrium price level to fall and equilibrium Real GDP to decrease. C) SRAS curve to the right, causing equilibrium price level to fall and equilibrium Real GDP to increase. D) SRAS curve to the left, causing equilibrium price level to rise and equilibrium Real GDP to decrease.
The rational-expectations hypothesis suggests that the forecasts that people make concerning future inflation rates
A. consistently underestimate the actual rate of inflation in the future. B. consistently overestimate the actual rate of inflation in the future. C. are always correct. D. are correct on average, but are subject to errors that are distributed randomly.