According to the figure above, which of the following events will increase the quantity demanded of bottled water?
A) a fall in the price of soda
B) a rise in the price of a fitness club membership
C) an increase in the number of buyers of bottled water
D) a fall in the price of bottled water
E) a rise in the price of bottled water
D
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
People are said to have rational expectations if they
A. use all available information in forming their expectations. B. assume that this year's inflation rate will be equal to the average inflation rate over the past 10 years. C. assume that this year's inflation rate will be the same as last year's inflation rate. D. merely guess at the inflation rate.
Refer to the diagram. Assume the economy is initially at point b 1 . With a time lag between price and nominal wage adjustments, an increase in aggregate demand will temporarily move the economy from:
A. b 2 to b 1 .
B. c 1 to b 2 .
C. b 1 to c 1 .
D. b 1 to b 2 .
If the poverty line is set too low, the official poverty rate will be
A. unaffected by this problem. B. higher than the true level. C. lower than the true level. D. negative.