If there is a decrease in disposable income in an economy, then:
A. Both the APC and the APS rise
B. The APC rises and the APS falls
C. The APC falls and the APS rises
D. Both the APC and the APS fall
B. The APC rises and the APS falls
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Economists agree that a monopolistically competitive market structure
A) can eliminate any excess capacity if all firms in the industry devote more funds to differentiating their products. B) lowers consumer utility because consumers pay a price higher than the marginal cost of production. C) is detrimental to society because it leads to a waste of scarce resources. D) benefits consumers because firms produce products that appeal to a wide range of consumer tastes.
If the FOMC purchases government bonds priced at $5,000 from a bond dealer who banks at National Bank, and if the reserve requirement is 20 percent, then the required reserves of National Bank:
a. increase by $5,000. b. increase by $4,000. c. increase by $1,000. d. decrease by $5,000. e. decrease by $1,000.