Which of the following is indicated by Engel's law?
A. The rate of inflation in an economy is inversely proportional to the rate of unemployment.
B. Everything else remaining unchanged, an increase in the price of a commodity lowers the real income of the consumers.
C. In the long run the developing countries will grow faster than the developed countries.
D. In the long run an increase in per capita income will drive down the relative prices of primary products.
Answer: D
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Refer to Figure 9.3. If the government establishes a price ceiling of $1.00, consumer surplus will
A) fall by $50. B) fall by $150. C) remain the same. D) rise by $50. E) rise by $150.
The GDP deflator
A. Is the price index based on a fixed basket of goods and services for the government. B. Is the broadest price index, covering all output. C. Is the best measure of inflation for consumers. D. Reflects the price changes felt by producers but not consumers.