Economists expect the relationship between consumption and disposable income to be

a. unpredictable.
b. transitory.
c. fixed.
d. inverse
e. stable.


e

Economics

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The new Keynesian economists argue that prices are relatively rigid because of

A) menu costs. B) overlapping staggered contracts. C) efficiency wages. D) All of the above.

Economics

Behavioral economists argue that asset price bubbles and other examples of herd behavior may be due to biases resulting from the law of small numbers

In particular, the investors may observe unusually ________ returns for some asset and use this limited information to ________ the probability that returns will be high in the future. A) low, over-estimate B) low, under-estimate C) high, over-estimate D) high, under-estimate

Economics

A tax would not impose a welfare cost only if: a. the quantity exchanged did not change as a result. b. supply was perfectly elastic

c. supply was unit elastic. d. the demand curve was perfectly elastic.

Economics

Which of the following is a valid reason for the government rather than the market to finance the provision of certain economic goods and services? a. When the government provides economic goods, they are free; costs are incurred when such goods are provided by private firms. b. Voters tend to be better informed than market consumers are

c. Decision makers in the market sector are motivated by self-interest, whereas political decision makers are primarily motivated by altruism (the desire to help others). d. Public goods tend to be undersupplied through the market since it is difficult for potential suppliers to withhold such goods from nonpaying consumers; the government can use taxes to overcome this problem of nonpayment.

Economics