If the demand for fast-food rises as a result of lower income, we would say fast-food is an inferior good.
a. True
b. False
Indicate whether the statement is true or false
Question 2Ben N. Jerry prefers to keep his 10,000 retirement savings buried in the backyard. After an increase in the price level, Ben reduces the amount of goods and services he wants to purchase. Ben's rationalization, that now his retirement savings won't buy as much, is consistent with which explanation of the aggregate demand curve's negative slope?
a. the interest rate effect
b. the open economy effect
c. the inflation effect
d. the wealth effect
Question 3Spending on goods and services by all levels of government in the U.S. combined is smaller than investment spending but larger than consumption.
a. True
b. False
Indicate whether the statement is true or false
Question 4If watermelons are normal goods, the demand for them will rise as the income of consumers rises.
a. True
b. False
Indicate whether the statement is true or false
Question 5If your wages are indexed so that they automatically adjust for inflation, in a period of continued high inflation, the cost of the goods and services you buy ____ and your nominal income ____.
a. decreases, decreases
b. increases, increases
c. decreases, remains the same
d. increases, remains the same
Question 6Since the U.S. is organized as a market economy, the government sector does not play any role in economic activity.
a. True
b. False
Indicate whether the statement is true or false
Question 7If an increase in the price of Good A causes a decrease in demand for Good B, Goods A and B are said to be complements.
a. True
b. False
Indicate whether the statement is true or false
Question 8If you are living in a period of continued high inflation on a fixed income, the cost of the goods and services you buy ____ and your nominal income ____.
a. decreases, decreases
b. increases, increases
c. decreases, remains the same
d. increases, remains the same
Question 9National economic policies are usually set by the local government in the U.S., making it the focus of economic discussions.
a. True
b. False
Indicate whether the statement is true or false
Question 10If Diet Pepsi and Diet Coke are substitutes than an increase in the price of Diet Pepsi will cause a decrease in demand for Diet Coke.
a. True
b. False
Indicate whether the statement is true or false
Question 11As the price level increases, the quantity of RGDP demanded in the economy ____, and when the price level decreases, the quantity of RGDP demanded in the economy ____.
a. decreases, decreases
b. increases, increases
c. increases, decreases
d. decreases, increases
Question 12Annual expenditures by the federal government exhibited an upward trend, rising from 3 billion in 1930 to more than 1 trillion in 2010.
a. True
b. False
Indicate whether the statement is true or false
Question 13If an increase in the price of Good A causes an increase in the demand for Good B, Goods A and B are said to be substitutes.
a. True
b. False
Indicate whether the statement is true or false
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