A theory asserts that consumers will purchase less of a good at higher prices than they will at lower prices, ceteris paribus. However, when the average price of cars increased throughout the 1990s, more cars were purchased. Which of the following best explains the apparent conflict between theory and data?
a. The ceteris paribus assumption is valid
b. It is likely that variables other than the price and quantity of cars demanded were changing.
c. The theory is valid. However, the price and quantity data gathered by researchers was clearly measured incorrectly.
d. The theory must be invalid.
b
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If AE < Y, which of the following will NOT occur?
A) inventories will decline B) actual investment will be more than planned investment C) employment will decline D) GDP will decline
The Capper-Volstead Act of 1922 applied the Sherman Anti-Trust Act to farm cooperatives, preventing them from restricting output and fixing prices
Indicate whether the statement is true or false
An unexpected discovery of a new mineral deposit will cause the
a. demand curve to shift outward. b. demand curve to shift inward. c. supply curve to shift outward. d. supply curve to shift inward.
In the United States, the purchasing power of money is determined by
a. the underlying precious metals that back each unit of currency. b. the value of U.S. treasury bonds that back each unit of currency. c. Federal Reserve policy, which controls the money supply. d. Congress, which controls the money supply.