The substitution effect occurs because when the price of one good increases, consumers will buy fewer substitute goods
a. True
b. False
Indicate whether the statement is true or false
False
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Suppose the price level falls. The result is that the:
a. aggregate supply curve would shift to the right. b. aggregate supply curve would shift to the left. c. general price level would rise causing a movement up the aggregate demand curve. d. aggregate demand curve would slope downward because of the real balances effect.
As observed in China's steel appliance market, the rise in the price of refrigerators resulted:
a. solely from an increase in the demand for refrigerators. b. from an increase in the demand for steel from all appliance industries. c. from a shortage of steel in the world markets. d. from an increase in the price of steel that was the result of increased demand for refrigerators.