The effect of an increase in interest rates on current consumption is
a) positive among borrowers if the income effect is dominant
b) positive among borrowers if the substitution effect is dominant
c) positive among savers if the income effect is dominant
d) positive among savers if the substitution effect is dominant
e) strongly positive in the aggregate consumption data
c) positive among savers if the income effect is dominant
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To be effective in raising people's wages, a minimum wage must be set
A) above the equilibrium wage rate. B) below the equilibrium wage rate. C) equal to the equilibrium wage rate. D) below $7. E) either above or below the equilibrium wage depending on whether the supply curve of labor shifts rightward or leftward in response to the minimum wage.
Suppose the Pleasant Corporation cuts the price of its American Girl dolls by 10 percent, and as a result, the quantity of the dolls sold increases by 25 percent. This indicates that the price elasticity of demand for the dolls over this range is
a. 2.5. b. 0.4. c. 0.5. d. 5. e. inelastic.
In the Solow model production function, Y = F(A, K, eL), K stands for:
A) kurtosis. B) consumption. C) capital. D) Keynes.
The MU/P of a good will decrease when there is a(n)
a. fall in the price of the good b. increase in its marginal utility c. increase in the price of a good d. increase in consumer surplus e. decrease in income