Which of the following statements is FALSE?
A) An increase in income causes an increase in the demand for a normal good.
B) An increase in income causes a decrease in the demand for an inferior good.
C) A decrease in income causes the demand curve for a normal good to shift to the left.
D) An increase in income causes the demand curve for an inferior good to shift to the right.
D
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In the short run, when the Fed increases the nominal interest rate, the real interest rate
A) permanently falls. B) does not change. C) permanently rises. D) temporarily rises. E) temporarily falls.
The income effect of an increase in the price of hominy grits (an inferior good) is a(n)
a. decrease in the demand for hominy grits b. decrease in the quantity demanded of hominy grits c. increase in the demand for hominy grits d. increase in the quantity demanded of hominy grits e. new demand curve because everything else is no longer constant