A change in consumers' incomes causes a change in:
A. the demand for normal goods but not the demand for inferior goods.
B. supply.
C. demand.
D. the cross-price elasticity of demand.
Answer: C
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When the Fed increases the federal funds rate,
A) there is no effect on investment because investment depends on the real interest rate. B) the real interest rate falls, and investment increases. C) the real interest rate rises, and investment decreases. D) the real interest rate is unaffected, but investment still decreases. E) the real interest rate rises, and investment does not change.
Consider the following: The relative price of movies this year has
A) increased. B) decreased. C) stayed the same. D) Not enough information has been given to calculate an answer.
Which of the following is an exogenous variable in the Three-Sector-Model?
a. Real Domestic GDP b. GDP price index c. Real risk-free interest rate d. Quantity of currency per time period e. Open market operations
An analysis of production possibilities curves indicates that the reason why underdeveloped nations have difficulties increasing their economic growth rates is because:
A. low population growth rates mean fewer workers to produce food and other necessities. B. their production possibilities curves shift in when resources are increased. C. the opportunity cost of shifting resources from consumption goods to capital goods is relatively low. D. they must cut back their already meager consumption levels to increase capital production.