The real wealth effect explains that higher prices
a. make people worse off by reducing the value of their wealth, leading them to save more and spend less
b. make people worse off by reducing the value of their wealth, leading them to save less and spend more
c. make people better off by increasing the value of their wealth, leading them to save less and spend more
d. increase borrowing, leading to higher interest rates and less investment
e. make domestic goods relatively more expensive, increasing the demand for domestic goods and decreasing the demand for foreign goods
A
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A scatter diagram can be used to see
A) if the value of a variable is rising or falling. B) the value of a variable for different groups in a population. C) if a relationship exists between two variables. D) how a variable behaves over time. E) whether a variable is positively or negatively related to itself.
"Higher ethanol production definitely and directly raises the price of corn," said USDA economist Ephraim Leibtag. In the long run in the corn market, what is TRUE if the production of ethanol increases?
A) Existing corn farmers will exit the market and decrease the market price. B) New corn farmers will enter the market and increase the market price. C) Existing corn farmers will exit the market and increase the market price. D) New corn farmers will enter the market and decrease the market price.