Kimberly decides to go back to college full time at the age of 30, and finds herself with a much lower income than she was earning before. Now that she has less income, she finds herself eating less steak and more pasta than ever before. We can conclude:
A. steak and pasta are both inferior goods, because they are both food she eats regardless of her income; also, pasta is an inferior good because her demand increased when her income went down.
B. steak and pasta are both normal goods, because they are both food she eats regardless of her income.
C. steak and pasta are both inferior goods, because they are both food she eats regardless of her income.
D. pasta is an inferior good because her demand increased when her income went down.
Answer: D
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Producers' total revenue will increase if
A) income increases and the good is an inferior good. B) the price rises and demand is elastic. C) the price rises and demand is inelastic. D) income falls and the good is a normal good.
Which of the following is a rationale for development planning?
(a) government failure. (b) market failure. (c) failure of consumers to understand their preferences. (d) all of the above are rationales for development planning. (e) none of the above are rationales for development planning.
Aggregate supply is upward sloping in the
a. new classical model. b. classical model. c. monetarist model. d. real business cycle models. e. both a and c.
Suppose that real GDP falls to 2 percent below potential GDP. Then, according to the Taylor rule, the Fed should reduce the federal funds, relative to the current rate of inflation, by:
A. ½ percentage point. B. 1 percentage point. C. 2 percentage points. D. 4 percentage points.