Economists might be willing to accept a policy that adversely affected distribution of income if it
a. lessened income disparities.
b. diminished labor productivity by a large amount.
c. increased productivity by a large amount.
d. were favorable to the rich.
c
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If Camila's income rises by 20 percent, and, as a result, she purchases 40 percent more dresses, her income elasticity for dresses is
a. 0.5. b. 1.0. c. 2.0. d. Not enough information is given to answer this question.
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to real GDP and the nominal value of the domestic currency in the context of the Three-Sector-Model?
a. Real GDP rises, and nominal value of the domestic currency falls. b. Real GDP rises, and nominal value of the domestic currency rises. c. Real GDP falls, and nominal value of the domestic currency remains the same. d. Real GDP falls, and nominal value of the domestic currency falls. e. Real GDP falls, and nominal value of the domestic currency rises.