Refer to the information provided in Figure 3.13 below to answer the question(s) that follow.
Figure 3.13Refer to Figure 3.13. Assume hamburgers are a normal good. An increase in income will cause a movement from
A. Point A to Point B.
B. S1 to S2.
C. D1 to D2.
D. Point G to Point F.
Answer: C
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Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the long run would be:
A. P2 and Y2. B. P1 and Y2. C. P4 and Y2. D. P1 and Y1.
Using a discount rate above the market interest rate to evaluate projects will
a. bias a decision toward going ahead with the project b. correct for distortions in capital markets c. have no impact on project evaluation d. bias a decision toward rejecting a project e. none of the above
A market is said to "clear" when
A) sellers give up selling their goods because they can't find any buyers. B) buyers and sellers are able to buy and sell as much as they want at the market price. C) the government decides to shut it down. D) sellers run out of goods to sell.
The chapter seems to imply that the direct influence of short-term interest rate changes by central bankers is not that powerful in terms of their direct impact on spending. Why then do so many people pay attention to the monetary policy?
What will be an ideal response?