The data in the table above shows the consumption by families in a small (poor) economy. The families consume only salt and bread. The reference base period is 2011. The CPI in 2012 is

Refer to the figure above. A change in the budget constraint from B2 to B3 indicates:

A) a decrease in the price of jeans. B) a decrease in the price of sweaters. C) an increase in the consumer's income. D) a decrease in the consumer's income.

The new classical school holds that: a. macroeconomic equilibrium is achieved only through active government intervention. b. unemployment is only temporary, because the economy tends naturally toward equilibrium. c. rigid prices and wages prevent the economy from achieving equilibrium. d. macroeconomic equilibrium cannot occur as long as the aggregate supply curve isvertical

e. rational expectations result in involuntary unemployment and prolonged periods of macroeconomic disequilibrium.