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Which of the following equations is correct?
AE = C + I + G + (X - M)
 
The 45-degree line in the Keynesian model represents a set of points where _____ equals _____
disposable income; consumption
 
A depression economy has considerable slack, so:
unemployment is high
 
Aggregate expenditures are equal to:
the total of consumption plus investment plus government expenditures plus exports minus imports
 
Consumption spending is:
spending by individuals and households on both durable and nondurable goods
 
_____ is the change in consumption associated with a change in income
The marginal propensity to consume
 
Saving is equal to:
disposable income minus consumption
 
As income increases, consumption ______
increases at a slower rate
 
MPC + MPS:
equals 1
 
If the stock market collapses, consumption will:
decrease because people feel less wealthy
 
Investment spending:
tends to be volatile
 
John Maynard Keynes focused on _____ to explain how the economy reaches short-term equilibrium employment, output, and income
aggregate spending
 
In the simple Keynesian model, equilibrium exists when:
investment spending equals saving
 
When the economy is in equilibrium in the simple Keynesian model:
saving is equal to investment
 
The formula for the simple spending multiplier is:
1 / (1 – MP
 
According to Keynes, as income grows:
both consumption spending and saving grow
 
When taxes are decreased, disposable income _______ and consumption spending ______________ multiplied by the change in disposable income
rises; rises by the marginal propensity to consume
 
The spending reduction necessary to bring an overheated economy back to full employment is called the:
inflationary gap
 
The GDP gap divided by the multiplier yields the:
inflationary or recessionary gap
 
Between 1929 and 1933, government spending _____ and net exports _____
stayed the same; declined
 
According to Keynes, what determines the level of employment and income?
aggregate expenditures
 
The collapse of home values that began in 2008 led to ____ in Americans' consumption and _____ in their saving rates
a decrease; an increase
 
Which of the following is NOT a reason the aggregate demand curve is negatively sloped?
income effect
 
The curve that shows how much GDP is demanded at various price levels is called:
aggregate demand
 
When the price of a given product declines, the consumer's spendable income rises because it takes less income to purchase the same quantity This is called the:
income effect
 
High family debt:
reduces the tendency to consume
 
Suppose the government raises income taxes, so consumers have less take-home pay This policy action will cause a(n):
decrease in aggregate demand
 
Government spending on Social Security:
increases aggregate demand
 
If the amount of regulation in an economy increases, the aggregate supply curve shifts _____ and output supplied will be _____
left; reduced
 
_____ will most likely increase the economy's long-run aggregate supply
Advances in technology
 
In macroeconomics, the long run is:
a period long enough that participants in the economy will have enough time to gain all relevant information and enough time to act correctly on that information
 
A shift of the aggregate _______ curve to the ________ would cause inflation to rise and employment to increase
demand; right
 
________ inflation occurs when a supply shock reduces aggregate supply
Cost-push
 
A solution to the simultaneous emergence of deflation and unemployment is to use policies that shift the:
aggregate demand curve to the right
 
The idea that new spending creates more new spending is known as:
the multiplier effect
 
Cost-push inflation is a situation in which:
the short-run aggregate supply curve shifts leftward
 
Cost-push inflation occurs when:
rising resource costs reduce short-run aggregate supply
 
The largest category of federal government spending in 2012 was:
Social Security
 
The largest source of federal government revenues is:
individual income taxes
 
_____ is the part of the budget that works its way through Congress each year; it includes such programs as national defense, transportation, Medicaid, and education
Discretionary spending
 
The $787 billion stimulus package passed in the United States in 2009 focused more on spending than on taxes partly because:
increased spending leads to a larger increase in GDP than the same reduction in taxes
 
Transfer payments are:
monies paid directly to individuals by the government
 
An increase in taxes:
removes money from the economy's spending stream
 
Expansionary fiscal policy is typically used to __________ aggregate demand in order to ____________
increase; escape a recession
 
Contractionary fiscal policy:
decreases aggregate demand
 
Supply-side fiscal policies include all of the following EXCEPT:
increasing transfer payments
 
Fiscal policy that focuses on shifting the long-run aggregate supply curve to the right is:
supply-side fiscal policy
 
A problem with supply-side fiscal policies is that they:
take longer to work than demand-side fiscal policies
 
Automatic stabilizers are designed so that as income falls:
spending does not fall as much as income
 
The _____ lag is the time required to turn fiscal policy into law and affect the economy
implementation
 
Public choice theorists primarily examine the:
relationship between economics and political decision making
 
The _____ is the sum of past _____
public debt; budget deficits
 
______ is the total accumulation of past budget deficits less surpluses
The public debt
 
The government can finance a budget deficit by:
selling assets
 
If the government borrows money from the Federal Reserve:
the quantity of money in circulation will rise
 
Crowding out:
leads to higher interest rates
 
Demand is a relationship between _______ and ___________
Price quantity demanded
 
Quantity demanded
The quantity of a good that people want to buy at a given price during a specific period of time
 
The law of demand states that a quantity demanded of a good in a market ______ as its price ______
declines, rises
 
The demand curve slopes downward from left to right because the quantity demanded is ______ related to price
negatively
 
An increase in demand shifts the demand curve to the _____
Right
 
If the preference for a product increases, then the demand for that product will ________
Increase
 
If a sufficient number of demanders expect the price of the good to increase in the future, these people will ______ increase their demand of the product today in order to stock up on the good and avoid the higher price in the future.
Increase
 
If a sufficient number of demanders think the price will decline tomorrow, the demand today will ________
Decrease
 
As the number of demanders in the market or population increases the demand for the good ______
increases
 
If demand increases after an increase in income, the the good is considered a _____ good
Normal
 
If demand decreases after an increase in income, the good is considered an _____ good
Inferior
 
If the price of a complement increases, the demand for the product in focus will ______
Decline
 
If the price of sugar increases, the quantity of coffee demanded at each price will ______
Decline
 
When the price of a substitute increases, the demand for the good in focus will ______
Increase
 
When does movement along the demand curve occur?
When the quantity demanded changes as a result of a change in the price of the good
 
Economists refer to a movement along the demand curve as a
change in quantity demanded
 
A shift in the demand curve occurs if there is a change that is due to any source except the ______
price
 
Supply is a relationships between _____ and _______
price, quantity supplied
 
The law of supply says that the _____ the price, the _____ the quantity supplied
higher, higher
 
The law of supply says that the price and the quantity supplied are ______ related
positively
 
When the price of a good increases, it leads to an ____ in the quantity supplied
increase
 
When supply increases, the supply curve shifts to the ____
Right
 
As the prices of factors increase, the costs of production increases, and supply _______
decreases (shift to the left)
 
If factor prices decline, then it is cheaper to produce and supply will _______
increase (shift to the right)
 
As the number of producers increases, the supply of the good will _________
increase
 
An improvement in technology reduces the amount of factors of production required to produce a given amount of output. Therefore, an improve in technology will reduce the cost of production and lead to an ________ in supply
increase
 
Assume Good A and Good B are complements in production. If the price of Good B increases, the supply of Good A will _____. When the price of Good B _____, the quantity of Good B supplied also ________
increase, increase, increase
 
Taxes _____ firms costs and ______ supply
increase, reduce
 
A shift in the supply curve occurs if there is a change due to any source except the ___
price
 
When there is a shortage, price _____
Rises
 
Whenever there is a surplus, price _____
Falls
 
At the market equilibrium, price is _____
the same
 
Surplus is a situation in which quantity _______ is greater than quantity demanded
supplied
 
Shortage is a situation in which quantity ______ is greater than quantity supplied
demanded
 
When there is a shortage, a higher price ______ the quantity demanded and _____ the quantity supplied to eliminate the  shortage
reduces, increases
 
When there is a surplus, a lower price _______ the quantity demanded and _______ the quantity supplied to eliminate the  surplus
increases, decreases
 
An increase in demand _____ the equilibrium price, and ______ equilibrium quantity
increases, increases
 
A decrease in demand ______ the equilibrium price, and ______ equilibrium quantity
reduces, reduces
 
A increase in supply ______ equilibrium price, and _______ equilibrium quantity
reduces, increases
 
A decrease in supply ______ equilibrium price, and ______ equilibrium quantity
increases, reduces
 
If both supply and demand increase, then the equilibrium quantity will ________. If supply shifts more than demand, the equilibrium price will _______
increase, decrease
 
If both supply and demand increase, then the equilibrium quantity will ________. If demand shifts more than supply, the equilibrium price will _______
increase, increase
 
If both supply and demand decline simultaneously then equilibrium quantity will ______. If demand decreases more than supply, the equilibrium price will ________
decrease, decrease
 
If both supply and demand decline simultaneously then equilibrium quantity will ______. If supply declines more than demand, the equilibrium price will ________
decrease, increase
 
If supply increases and demand decreases simultaneously, then equilibrium price will ______. If the decrease in demand is more than the increase in supply, the quantity _______
Decrease. increases
 
If supply increases and demand decreases simultaneously, then equilibrium price will ______. If the decrease in demand is less than the increase in supply, the quantity ______
Decrease. decreases
 
If supply decreases while demand increases then price will _____. If the decrease in supply is more than the increase in demand, then equilibrium quantity will ______
Increase, decrease
 
If supply decreases while demand increases then price will _____. If the increase in demand is more than the increase in demand, then equilibrium quantity will _______.
increase, increase
 
A government price control that sets the maximum allowable price for a good
price ceiling
 
A government price control that sets the minimum allowable price for a good
price floor
 
What's the purpose of a price ceiling?
to help consumers in situations where the government thinks that the equilibrium price is too high
 
What's the purpose of price floors?
to help suppliers of good and services in situations where the government feels that the equilibrium price is "too low"
 
What are side effects of price ceilings?
shortages, long lines for goods, black markets, reduction in quality of goods
 
When there are price ceilings, the quantity demanded is more or less than the quantity supplied?
more (shortage)
 
When there are price floors, the quantity supplied is more or less than the quantity demanded?
more
 
For price floors to effect the market, they have to be _____ than the equilibrium price
higher
 
For price ceilings to effect the market, they have to be _____ than the equilibrium price
lower
 
What are the side effects of price floors?
Cause surpluses, productivity problems.
 
The price elasticity of demand is the percentage change in the ____________ of a good divided by the percentage change in  the ______ of that good
quantity demanded, price of that good
 
The price elasticity of demand is a measure of the sensitivity of the _________ of a good to the ______ of the good
quantity demanded, price.
 
If the price elasticity of demand for contact lenses is high, than the quantity of contact lenses demanded by people changes by a ____ amount when the price changes
large
 
If the price elasticity of demand for bread is low, than the quantity of bread demanded changes by a _____ amount when the price of bread changes
small
 
if there's a relatively flat line, this shows that the quantity demanded is ______sensitive to the price
very
 
If there's a demand curve with a relatively flat curve, then there is a _____ price elasticity of demand
high
 
If the demand curve is more vertical, then there is a ___ price elasticity of demand
low
 
How do you find total revenue?
price x quantity
 
The ______ the demand curve, the more inelastic the demand
steeper
 
If a product has several substitutes, then an increase in price will lead to a relatively large decrease in quantity demanded as consumers switch to substitutes, implying a relatively _______ demand
Elastic
 
If a good does not have many substitutes, a price change does not change quantity demanded very much, implying a relatively ________ demand.
Inelastic
 
The longer a price change is in place the more _____ demand is
elastic
 
Why does a longer price change in place make demand more elastic?
As time passes, it is more likely that a substitute can be found for the good.
 
If demand is elastic, a price increase will correlate with a ______ in industry revenue
decrease
 
If demand is inelastic a price increase will correlate with an ________ in industry revenue
increase
 
What are the assumptions of the PPF?
fixed resources, fixed technology
 
Perfect in-elasticity
elasticity equals to zero
 
elasticity between zero and one
Relative inelasticity
 
elasticity equal to one
unitary elasticity
 
elasticity greater than one and less than infinity
relative elasticity
 
perfect elasticity
elasticity equal to infinity
 
If a one percent change in price causes less than a one percent decline in quantity demanded, then demand is relatively ________ and the price change will cause an _______ in the industry's total revenue
inelastic, increase
 
If a one percent change in price corresponds with a greater than one percent change in quantity demanded, then demand is relatively _______ and the price change will cause a _____ in industry total revenues
elastic, decrease
 
When demand is relatively elastic, price increases lead to a ________ in total revenue
decrease
 
When demand is unitary elastic price increases _______ changes in total revenue
do not cause
 
Whether or not the income elasticity of demand is positive or negative depends upon whether the product is ______ or ______
normal, inferior
 
If the income elasticity of demand is positive, the good is _______
normal
 
If the income elasticity of demand is negative, the good is inferior
inferior
 
If the cross-price elasticity is positive, the two goods are _______
Substitutes
 
If the cross-price elasticity is less than zero then the two goods are ______
Complements
 
The price elasticity of supply is _____ because the law of supply implies a _____ relationship between price and quantity supplied
positive
 
If the price elasticity of supply is zero, supply is _____
perfectly inelastic
 
If the price elasticity of supply is between zero and one, supply is
relatively inelastic
 
If the elasticity of supply equals one, then supply is
unitary elastic
 
If the elasticity of supply is greater than one, supply is considered
relatively elastic
 
An increase in the price and an ambiguous change in quantity is most likely caused by:
a shift to the left in supply and a shift to the right in demand.
 
It is certain that the equilibrium quantity will rise when:
the supply curve and the demand curve both shift to the right.
 
If elasticity of supply is infinite, supply is
perfectly elastic
 
Two things affect the price elasticity of supply
technology used to produce the good and length of time during which the price change is in place
 
Why does technology affect the elasticity of supply?
some technology is impossible to replicate
 
An organization that transforms resources (inputs) into products (outputs). They are the primary producing units in a market economy. They make decisions in order to maximize profits
Firm
 
A person who organizes, manages and assumes the risks of a firm, taking a new idea or new product and turning it into a successful business.
Entrepreneur
 
The consuming units in a economy
Households
 
(Product) The markets in which goods and services are exchanged
Output Markets
 
The inputs into the production process. Land, labor, and capital are the three key __________.
Factors of Production
 
The amount (number of units) of a product that a household would buy in a given period if it could buy all it wanted at the current market price
Quantity Demanded
 
Shows how much of a given product a household would be willing to buy at different prices for a given period of time
Demand Schedule
 
A graph illustrating how much of a given product a household would be willing to buy at different prices
Demand Curve
 
The negative relationship between price and quantity demanded: "Ceteris paribus", as price rises, quantity demanded decreases; as price falls, quantity demanded increases
Law of Demand
 
The sum of all a household's wages, salaries, profits, interest payers, rents, and other forms of earnings in a given period of time. It is a flow measure
Income
 
(Wealth) The total value of what a household owns minus what it owes. It is a stock measure
Net Worth
 
Forms of earnings received by a household in a given period of time
Flow Measure
 
Measuring something at a given point in time
Stock Measure
 
Goods for which demand goes up when income is higher and for which demand goes down when income is lower
Normal Goods
 
Goods for which demand tends to fall when income rises
Inferior Goods
 
Goods that can serve as replacements for another; when the price of one increases, demand for the other increases
Substitutes
 
Identical products are
Perfect Substitutes
 
Goods that "go together"; a decrease in the price of one results in an increase in the demand for the other and vice versa
Complements
 
The change the takes place in a demand curve corresponding to a new relationship between quantity demanded of a good and the price of that good. The shift is brought about by a change in the original conditions
Shift of a Demand Curve
 
The change in quantity demanded brought about by change in price
Movement Along a Demand Curve
 
The sum of all the quantities of a good or service demanded per period by all the households buying in the market for that good or service
Market Demand
 
The difference between Revenues and costs
Profit
 
The amount of a particular product that a firm would be willing and able to offer for sale at a particular price during a given time period
Quantity Supplied
 
Shows how much of a product firms will sell at alternative prices
Supply Schedule
 
The positive relationship between price and quantity of a good supplied; An increase in a market price will lead to an increase in quantity supplied, and a decrease in market price will lead to a decrease in quantity supplied
Law of Supply
 
A graph illustrating how much of a product a firm will sell at different prices
Supply Curve
 
The change in quantity supplied brought about by a change in price
Movement Along a Supply Curve
 
The change that takes place in a supply curve corresponding to new a new relationship between quantity supplied of a good and the price of that good. the shift is brought about by a change in the original conditions
Shift of a Supply Curve
 
the sum of all that is supplied each period by all producers of a single product
Market Supply
 
The condition that exists when quantity supplied and quantity demanded are equal. At equilibrium, there is no tendency for price to change
Equilibrium
 
(excess demand) The condition that exists when quantity demanded exceeds quantity supplied at the current price
Shortage
 
(excess supply) The condition that exists when quantity supplied exceeds quantity demanded at the current price
Surplus
 
The highest price a consumer is willing to pay for a specific quantity of goods; or the lowest price suppliers are willing to sell a specific quantity of goods for. May not always be equilibrium price.
Reservation Price
 
An organization that transforms resources into products. Firms are the primary producing units in a market economy
Firm
 
A person who organizes, manages, and assumes the risks of a firm, taking a new idea or a new product and turning it into a successful business.
Entrepreneur
 
The consuming units in an economy.
Household
 
the markets in which goods and services are exchanged
Product or Output Markets
 
the markets in which the resources used to produce products are exchanged
Input or Factor Markets
 
The Input/factor market in which households supply work for wages in firms that demand labor
Labor Market
 
The input/factor market in which households supply their savings, for interest or for claims to future profits, to firms that demand funds to buy capital goods
Capital Market
 
The inputs into the production process. Land, labor and capital and the three key factors of production
Factors of Production
 
the Income available to the household, the household's amount of accumulated wealth, the prices of other products available to the household, the household's tastes and preferences, and the households's expectations and future income, wealth and prices
The Shift of the demand curve or change in demand
 
the amount of a product that a household would buy in a given period if it could buy all it wanted at the current market  price
Quantity Demanded
 
a graph illustrating how much of a given product a household would be willing to buy at different prices
Demand Curve
 
The negative relationship between price and quantity demanded: As price rises, quantity demanded decreases. As price falls, quantity demanded increases
Law of Demand
 
Goods for which demand goes up when income is higher and for which demand goes down when income is lower
Normal Goods
 
Goods for which demand tends to fall when income rises
Inferior Goods
 
Goods that can serve as replacements for one another, when the price of one increases the demand for the other goes up
Substitutes
 
Identical Products
Perfect Substitutes
 
Goods that "go together" A decrease in the price of one results in an increase in demand for the other, and vice versa
Complements, complementary goods
 
The change that takes place in a demand curve corresponding to a new relationship between quantity demanded of a good and price of that good. The shift is brought about by a change in the original conditions i.e. income, price of related goods
Shift of a Demand Curve
 
Movement along a demand curve
The change in quantity demanded brought about by a change in price
 
Change in price of a good or service leads to
Change in quantity demanded (movement along the demand curve)
 
Change in demand (shift of the demand curve)
Change in income, preferences, or prices of other goods or services leads to
 
The sum of all the quantities of a good or service demanded per period by all the households buying in the market for that good or service.
Market Demand
 
the difference between revenues and costs
Profit
 
The amount of a particular product that a firm would be willing and able to offer for sale at a particular price during a given time period. Movement along the same supply curve due to a price change is a change in quantity supplied.
Quantity Supplied
 
The positive relationship between price and quantity of a good supplied: An increase in market price will lead to an increase in quantity supplied, and a decrease in market price will lead to a decrease in quantity supplied
Law of Supply
 
A graph illustrating how much of a product a firm will sell at different prices.
Supply Curve
 
The change in quantity supplied brought about by a change in price
Movement along a supply curve
 
The change that takes place in a supply curve corresponding to a new relationship between quantity supplied of a good and the price of that good. The shift is brought about by a change in the original conditions
Shift of a supply curve
 
The condition in which the price is such that quantity supplied=quantity demanded. At equilibrium, there is no tendency for price to change. I.E. where the S and D curves cross
Equilibrium
 
The condition that exists when quantity demanded exceeds quantity supplied at the current price. At this point, price is below the equilibrium. Market forces push the price up to the equilibrium
Excess Demand or Shortage
 
The Condition in which quantity supplied exceeds quantity demanded at the current price. At this point, price is above equilibrium. Market forces push the price down to the equilibrium
Excess supply or surplus
 
Reservation Price
Where price = Qd = 0
 
A demand schedule is:
a table showing how much of a good consumers will buy at different prices.
 
Which of the following best describes demand?
A change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve.
 
Which of the following factors would cause a movement along the demand curve for a particular good?
a change in the price of that good
 
A rightward shift of the demand curve shows that
something has happened to cause a higher quantity demanded at every given price.
 
A leftward shift of the demand curve shows that
something has happened to cause a lower quantity demanded at every given price.
 
Which of the following will cause a movement down along a demand curve?
a decrease in the product price
 
Which of the following will cause a decrease in demand?
an increase in the price of a complementary good
 
Which of the following best describes the law of demand?
As the price of a DVD rental rises, fewer DVDs are rented.
 
A decrease in the price of a good will result in:
an increase in the quantity demanded.
 
A decrease in the price of butter will _________ the demand for margarine, a substitute for butter.
Decrease
 
A decrease in the price of butter will cause the demand for margarine, a substitute for butter, to:
Shift to the left
 
If bagels and donuts are substitute goods, then which of the following is likely to occur if the price of bagels is reduced?
The demand curve for donuts will shift to the left.
 
Assume the demand schedule for smart phones is downward sloping. If the price of smart phones increases from $200 to $600:
a decrease in quantity demanded of smart phones will occur.
 
Which of the following would cause a decrease in the demand for coffee?
a decrease in the price of tea (a substitute for coffee)
 
If the price of gasoline rises, then:
there is an upward movement along the demand curve for gasoline.
 
Along a given demand curve, an increase in price of the product will
decrease the quantity demanded.
 
A decrease in the price of eggs will result in:
a movement along the demand curve for eggs.
 
Other factors held constant, as the price of an iPad rises:
the quantity demanded for iPads falls.
 
Suppose that, as incomes in your community increase, the demand for taxi service increases and the demand for bus service decreases. From this, we can conclude that
Taxi service is a normal good; bus service is an inferior good.
 
If buyers' value for bicycles decrease ,the demand curve for bicycles will ______.
Shift to the left
 
If buyers' value for bicycles increase, the demand curve for bicycles will ______.
Shift to the right
 
(Factor) The markets in which the resources used to produce goods and services are exchanged
Input Markets
 
The input/factor market in which households supply work for wages to firms that demand labor
Labor Market
 
The input/factor market in which households supply their savings, for interest or for claims to future profits, to firms that demand funds to buy capital goods
Capital Market
 
The input/factor market in which households supply land or other real property in exchange for rent
Land Maket
 
Which is the most likely effect of a decrease in the price of tablet computers upon the market for laptop computers?
decreased equilibrium price and decreased equilibrium quantity
 
The demand for gasoline is rising. Which of the following statements describes a possible cause?
Consumers expect prices to rise in the near future.
 
If the price of gasoline increases from $4 to $4.50,:
people will buy less gasoline.
 
Which of the following would be considered a complementary good for a kayak?
life jacket
 
An increase in the price of butter will _________ the demand for margarine, a substitute for butter.
Increase
 
An increase in the price of butter will cause the demand for margarine, a substitute for butter, to:
Shift to the right
 
When the price of wine decreases, the quantity of wine demanded:
Increases
 
When the price of wine increases, the quantity of wine demanded:
Decreases
 
When the price of wine decreases, the demand for wine:
Stays the same
 
When the price of wine increases, the demand curve for wine:
Stay the same
 
An increase in buyers' income will _________ the demand for public transportation, an inferior good.
Decrease
 
An increase in buyers' income will _________ the demand for cars, a normal good.
Increase
 
An increase in the price of gasoline will cause the demand for cars, a complement of gasoline, to:
Shift to the left
 
An increase in buyers' income will cause the demand for cars, a normal good, to: ________.
Shift to the right
 
An increase in the price of gasoline will _________ the demand for cars, a complement of gasoline.
Decrease
 
A decrease in the price of gasoline will _________ the demand for cars, a complement of gasoline.
Increase
 
A decrease in buyers' income will cause the demand for cars, a normal good, to:
Shift to the left
 
A decrease in the price of on-demand video-streaming services such as Netflix leads to:
a decrease in the demand for DVDs.
 
Which of the following illustrates the law of demand?
Lindsay offers to buy more sticks of chewing gum at $1 than $2.
 
The ________ apples will decrease when apple prices rise.
quantity demanded of
 
Which of the following will cause an increase in the quantity demanded for iPhones?
a decrease in the price of iPhones
 
Assuming that paperback books are an inferior good, which of the following could cause a decrease in demand for paperback books?
An increase in incomes
 
Assuming that yarn and knitting needles are complements, which of the following would cause an increase in the demand for yarn?
A lower price of knitting needles
 
Assuming that pretzels are a substitute for popcorn, which of the following would cause a decrease in the demand for pretzels?
A lower price of popcorn
 
A decrease in the price of gasoline will cause the demand for cars, a complement of gasoline, to:
Shift to the right
 
If an increase in income leads to an increase in the demand for opera tickets, then opera concerts are a(n):
normal good.
 
In recent years, stainless steel kitchen appliances have become more popular. This change has caused
an increase in demand for stainless steel appliances.
 
Assuming that ice cream is a normal good, which of the following could cause an increase in the demand for ice cream?
An increase in the price of substitutes for ice cream, such as frozen yogurt
 
Assuming that hardcover books are a normal good, which of the following could cause a decrease in demand for hardcover books?
A decrease in incomes
 
Which pair are most likely substitute goods?
Soft drinks and lemonade
 
If a consumer buys a set of headphones at the same time as she buys an .mp3 player, these two products are most likely:
complementary goods
 
Alice goes to the local supermarket to purchase one package of her favorite taco shells. She often pays $1.50 for a package, but she finds they are on sale for $1 each. According to the law of demand, one can expect Alice to:
purchase more than one package of taco shells.
 
A decrease in buyers' income will cause the demand for public transportation, an inferior good, to:
Shift to the left (When buyers' income increases, the demand for inferior goods decrease.)
 
If there is a widely held expectation that prices of cotton will be higher next year, then
the demand for cotton will increase today.
 
Consider two competing motorcycle manufacturers, Harley-Davidson and Honda. If Harley-Davidson raises the price of its motorcycles, we can expect:
a shift to the right in the demand curve for Hondas and higher prices for Hondas.
 
The market price of airline flights increased recently. Some economists suggest that the price increased because several airlines went out of business. They believe that in the market for flights:
supply decreased
 
An ambiguous change in price and a decrease in quantity are most likely caused by:
a shift to the left in supply and a shift to the left in demand.
 
Gasoline, a derivative of oil, is a large part of transportation costs for many producers. If the price of oil increases at the same time that incomes fall for many consumers, one would expect the equilibrium price of many normal goods to ________, while their equilibrium quantities would ________.
fall, rise, or stay the same; decrease
 
If the price of corn is rises, we would expect:
the quantity of corn supplied to rise.
 
The market for milk is initially in equilibrium. Milk producers engage in an advertising program to encourage milk drinking, which succeeds in shifting consumer tastes toward drinking milk. More milk producers enter the market. Standard demand and supply analysis tells us that:
the equilibrium quantity of milk will rise, but we can't determine how the equilibrium price will be affected.
 
If there is a shortage of parking spaces in the downtown business district, ________.
the price of parking downtown is below its equilibrium price.
 
Suppose the demand curve for good Z is downward sloping. If the price of good Z decreases because of a shift in the supply of good Z, this will cause:
a movement along the demand curve of good Z.
 
An increase in supply, with no change in demand, will lead to ________ in equilibrium quantity and ________ in equilibrium price.
an increase; a decrease
 
A decrease in the price of bagels will _______ the market price and ________ the market quantity of cream cheese, a complement of bagels.
Increase; increase
 
At any moment the equilibrium price in the market for tablet computers will be determined by ________ .
Buyers and the sellers of tablet computers
 
Which of the following always results in an increase in price and quantity?
an increase in demand with no change in supply
 
If there is a surplus of wheat on the market,
the price of wheat will fall.
 
An increase in demand with no change in supply will lead to ________ in equilibrium quantity and ________ in equilibrium price.
an increase; an increase
 
A supply surplus in the market for lettuce will _______ the equilibrium price of lettuce.
Decrease
 
A decrease in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.
a decrease; a decrease
 
A decrease in demand and a decrease in supply will lead to ________ in equilibrium quantity and ________ in equilibrium price.
a decrease; an indeterminate change
 
In the market for grass-fed beef, what would cause a price increase?
The prices of grass and corn increase.
 
Equilibrium quantity will always increase if:
supply and demand both increase.
 
Say the following two events occur at the same time: 1) an increase in the price of milk, an input in the production of cheese; 2) a decrease in the price of bagels, a complement of cheese. The following two events would lead to a(n) _________ in the market price and a(n) __________ in the market quantity of cheese.
increase; indefinite change
 
Say the following two events occur at the same time: 1) a decrease in the price of milk, an input in the production of cheese; 2) a decrease in the price of bagels, a complement of cheese. The following two events would lead to a(n) _________ in the market price and a(n) __________ in the market quantity of cheese.
indefinite change; increase