Consumers buy less of a good as its price increases because
a. production costs have risen.
b. substitute goods are now relatively cheaper.
c. the income of consumers has effectively risen.
d. the higher price will make the good more valuable to each consumer.
B
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If the price level in an economy rises and its output level decreases as it gravitates toward its potential GDP, then: a. a policy to manipulate the aggregate supply is being used
b. an active approach to correcting a recessionary gap is being used. c. an active approach to correcting an expansionary gap is being used. d. a passive approach to correcting a recessionary gap is being used. e. a passive approach to correcting an expansionary gap is being used.
The CPI does not reflect the increase in the value of the dollar that arises from the introduction of new goods
a. True b. False Indicate whether the statement is true or false