The desire for goods and services is
a. created by a market economy
b. the ultimate explanation for all production
c. why it is so difficult to explain how our economy works
d. the cause of inflation
e. what causes the market wage for labor to continually increase
B
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Which of the following is true?
a. Inflation and unemployment rates can both increase in the short run in response to negative supply shocks. b. Inflation and unemployment rates cannot both decrease in the short run in response to reduced aggregate demand. c. Inflation and unemployment rates can both decrease in the short run in response to positive supply shocks. d. All of the above are true.
Corey has a blue sweater and a denim jacket. On some days he chooses to wear the sweater but on others he chooses to wear the jacket. Economists would most likely conclude that:
A. Corey’s preferences have changed. B. Corey’s preferences have not changed, but other factors may have changed such as the temperature outside. C. Corey is irrational if he wears different clothing on different days. D. Corey is indifferent between wearing a jacket or a sweater.