An increase in demand for a good can be caused by
A) a decrease in the price of a substitute good.
B) a reduction in income if the good is a normal good.
C) a decrease in the price of a complementary good.
D) an increase in price of a complementary good.
C
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Suppose that when the price of hamburgers increases, the Ruiz family increases their purchases of hot dogs. To the Ruiz family,
A) hamburgers and hot dogs are normal goods. B) hamburgers and hot dogs are substitutes. C) hamburgers and hot dogs are complements. D) hamburgers and hot dogs are inferior goods.
Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower