If individuals have money illusion, they react to changes in certain prices without regard to simultaneous changes in other prices
Indicate whether the statement is true or false
TRUE
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In the above figure, the deadweight loss due to the tax is
A) $1,000. B) $2,000. C) $4,000. D) $8,000.
Purchases of foreign assets by domestic firms or households is called a:
A. capital outflow. B. capital inflow. C. trade deficit. D. trade surplus.
Which is true under conditions of pure competition?
A. No single firm can influence the market price by changing its output. B. There are differentiated products. C. The market demand curve is perfectly elastic. D. Firms that cannot make pure or economic profits go bankrupt.
Assume that Tonya consumes only two products, pizza and potato chips, out of a given budget. Both are normal goods for Tonya. If the price of pizza decreases, then Tonya's consumption of pizza will:
A. Decrease due to the income effect B. Decrease due to the substitution effect C. Increase due to the income effect D. Increase due to the law of diminishing marginal utility