Category: Economics

About 8% of the foreign-born population in the U.S. is Black.
True
False

➤ How does an increase in consumer income affect demand for normal versus inferior goods?
When income rises, demand for normal goods increases and shifts the demand curve right. For inferior goods, higher income reduces demand and shifts the curve left. The size of the shift depends on income elasticity. Remember that a price change for good X produces movement along the curve, not a shift.

Which of the following is true about an increase in the supply of housing?

Where did the Hebrew kings found their capital?
Jerusalem
Babylon
Jericho
Tyre

➤ How does the Fed’s stabilization of the output gap affect unemployment?
Stabilizing the output gap reduces cyclical unemployment by closing the gap between actual and potential GDP. Monetary policy eases demand shortfalls in downturns and tempers overheating in expansions, which keeps hiring and layoffs less volatile and supports steadier labor market conditions.

Why is the concept of oppurtunity cost so important when making decisions?