Suppose an individual has a fixed amount of wealth to allocate between consumption in two periods (c1 and c2). Any funds not spent in period 1 will earn interest (at the rate r) which will increase purchasing power in period 2 . Consider four possible reactions to an increase in r: I. c1 increases. II. c1 decreases. III. c2 increases. IV. c2 decreases. Which of these is consistent with the
hypothesis that both c1 and c2 are normal goods?
a. I, II, III, and IV
b. I, II, and IV, but not III
c. I, III, and IV, but not II
d. I, II and III, but not IV
d
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
The sum of the marginal utilities of a good, at any consumption level
a. cannot be measured b. adds up to total utility c. adds up to maximum utility d. is negative because of the law of diminishing marginal utility e. is zero because marginal utility eventually becomes negative, canceling the positive values of marginal utility
There are race-based differences in income that cannot be explained by factors such as educational attainment and years of experience. Evidence of discrimination comes from audit studies, where otherwise similar white and minority candidates are sent to the same source to seek jobs, rent apartments, or apply for mortgage loans, and minority candidates are treated less favorably
Indicate whether the statement is true or false
Use a supply and demand diagram to show how migration affects wages in a high-wage country and a low-wage country
