Of the three major categories of consumption, ________ is the most volatile because their purchase ________
A) services; is sensitive to income levels
B) nondurables; is sensitive to income levels
C) durables; can be postponed when incomes decline
D) durables; they are necessities
C
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According to the traditional Keynesian analysis, if the government increases spending and pays for all of it by raising current taxes, then
A) a budget surplus will occur. B) aggregate demand will increase. C) a budget deficit will occur. D) aggregate demand will decrease.
Suppose a profit-maximizing monopoly is able to employ group price discrimination. The marginal cost of providing the good is constant and the same in both markets
The marginal revenue the firm earns on the last unit sold in the market with the higher price will be A) greater than the marginal revenue the firm earns on the last unit sold in the market with the higher price. B) less than the marginal revenue the firm earns on the last unit sold in the market with the higher price. C) equal to the marginal revenue the firm earns on the last unit sold in the market with the higher price. D) greater than the marginal cost of the last unit.