Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will
a. decrease, and producer surplus in the industry will decrease.
b. increase, and producer surplus in the industry will increase.
c. decrease, and producer surplus in the industry will increase.
d. increase, and producer surplus in the industry will decrease.
b
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If the unemployment rate is less than the natural unemployment rate, then
A) there is no frictional unemployment. B) cyclical unemployment is greater than zero. C) real GDP is less than potential GDP. D) real GDP is greater than potential GDP. E) frictional unemployment is negative.
In Figure 4-4 above, if the interest rate falls from 10% to 7.5% and this causes businesses to become more optimistic about future investment conditions, we would observe that planned investment would
A) decrease from B to C to D. B) increase from B to C to D. C) increase from B to C to F. D) decrease from B to C to F.