Goods with an income elasticity of demand greater than 1 are called
a. necessities
b. inferior goods
c. normal goods
d. luxuries
e. complements
D
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People are forced to economize because of
A. competition. B. pressure to conform. C. scarcity. D. the absence of money.
Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
A Keynesian economist would expect a supply-side tax cut to shift
a. only the aggregate supply curve outward. b. only the aggregate demand curve outward. c. both the aggregate demand and aggregate supply curves outward. d. the aggregate supply curve outward and the aggregate demand curve inward.
The situation where marketers introduce products that are not designed to sell, but are designed to manipulate consumers into choosing a similar, but superior product is known as:
A. the decoy effect. B. the anchoring effect. C. bundling. D. mental accounting.