If there is a decrease in demand for lettuce, we would expect:
A. both the price and quantity sold to increase.
B. both the price and quantity sold to decrease.
C. the price to decrease and the quantity sold to increase.
D. the price to increase and the quantity sold to decrease.
Answer: B
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The law of supply states that, other things remaining the same,
A) demand increases when supply increases. B) if the price of a good increases, firms buy less of it. C) if the price of a good increases, the quantity supplied increases. D) as people's income increase, the supply of goods increases. E) if the price of a good increases, the supply increases.
An example of "investment" in computing real GDP using the expenditure approach is the purchase of
A) a new set of tools by an auto mechanic, for use in repairing cars. B) 100 shares of IBM stock. C) a 100 year old house by a married couple. D) computer chips by Dell to put in their personal computers.
MPC is equal to
a) delta C / delta S b) delta S / delta C c) delta C / delta YD d) delta S / delta YD
Answer the following questions true (T) or false (F)
1. YFE represents the level of potential GDP in the economy. 2. Real GDP is equal to nominal GDP adjusted for productivity. 3. The marginal propensity to consume is equal to the percent change in consumption with respect to a change in income.