Engel's Law claims that
a. the percentage increase in quantity demanded for food is less than the percentage increase in income
b. food is an inferior good (as economists define inferior good, of course)
c. the demand for food is income elastic
d. the income elasticity for food is negative
e. consumers' demand for food does not increase when the price of food falls
A
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Macroeconomists are interested in how consumers respond to changes in the market real interest rate because
A) interest rates are an important channel for the effects of monetary and fiscal policies. B) substitution effects and income effects net out in the aggregate. C) of the permanent income hypothesis. D) future income affects current consumption.
A production possibilities curve will shift outward or to the right for all of the following reasons EXCEPT
A) an increase in the unemployment rate. B) an increase in the quality of the labor force. C) an improvement in production technology. D) a discovery of a new source of renewable energy.