Answer the following statements true (T) or false (F)
1. An increase in consumer incomes will cause a decrease in the demand for an inferior good.
2. Two goods are considered to be related goods by many buyers: if the price of one increases, buyers buy more of the other. This indicates that the two goods are complements.
3. If two goods are substitutes, a decline in the price of one will cause a decrease in the demand for the other.
4. The law of supply states that, ceteris paribus, if the price of loans (known as "interest rate") rises then the quantity supplied of loans will decrease.
1. TRUE
2. FALSE
3. TRUE
4. FALSE
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If the marginal propensity to save is 0.4 and disposable income increases from $1,000 to $1,500, saving will increase
A) $300. B) $200. C) $100. D) $400.
Suppose the current exchange rate between the euro and the United States dollar is 1.15 euros per dollar. If interest rates in the United States increase and interest rates in Europe remain unchanged then
A) the demand for dollars will increase. B) the demand for dollars will decrease. C) the demand for euros will increase. D) None of the above answers is correct.