Economists agree that
a. neither high inflation nor moderate inflation is very costly.
b. both high and moderate inflation are quite costly.
c. high inflation is costly, but they disagree about the costs of moderate inflation.
d. moderate inflation is as costly as high inflation.
c
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Suppose you drink more tea because the price of coffee has increased. Which of the following best explains your action?
a. the law of supply b. tea and coffee are complements c. the substitution effect d. the income effect e. your nominal income has increased
The substitution effect of a change in the price of bananas refers to the way in which a change in the
a. price of a substitute affects the demand for bananas b. price of bananas affects the ability to buy them c. relative price of bananas changes demand for them d. relative price of bananas changes the quantity demanded of bananas e. price of a substitute affects the quantity demanded of bananas