Whenever central bankers face more than one goal, the policy framework requires:
A. central bankers to make their priorities clear.
B. the central bank to always focus on inflation first.
C. central bankers to focus on all goals, no matter what.
D. economic growth to be the top priority.
Answer: A
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If the law of demand holds, then
A. the demand curve has a negative slope. B. the demand curve has a positive slope. C. the demand curve shifts whenever the price changes. D. the diminishing marginal utility is not valid.
Demand for a good will tend to be more price elastic if it exhibits which of the following characteristics?
A) It accounts for a small part of the consumer's total income. B) The good has many available substitutes. C) It is a non-durable (as opposed to a durable good). D) There is little time for the consumer to adjust to the price change.
Which of the following is correct? a. An increase in the quantity of labor always leads to economic growth
b. Increased education adds to the stock of human capital, not unlike building factories adds to the stock of physical capital. c. A decrease in the productivity of labor leads to economic growth. d. Japan and Hong Kong are rich in natural resources.
The substitution effect argues that a consumer
A. will always use the additional purchasing power from a price decrease to purchase more of both goods. B. will not purchase more of a good when its price falls. C. will purchase less of both goods if his or her real income increases. D. will purchase more of a good that has become relatively cheaper, and less of a good that has become relatively more expensive.