10.To contain inflation policy makers can: Use the anti-trust laws to prevent la
ID: 1219948 • Letter: 1
Question
10.To contain inflation policy makers can: Use the anti-trust laws to prevent large firms from raising their prices. Promote competition and make it more difficult for firms to raise their prices. Use expansionary monetary and fiscal policies to increase the supply of goods and services to reduce prices. Use contractionary monetary and fiscal policies to decrease demand to contain wage and price inflation. Enforce regulations on "price gouging" to contain price inflation. 11.What impact would a rise in consumer income have on the demand for cars? The demand for cars would decrease if cars are a normal good. The demand for cars would increase if cars are a normal good. The demand for cars would increase if cars are an inferior goods. The demand for cars would decrease if car prices remain constant. The demand for cars would increase if car prices were to fall. 12. Which of the following is NOT a reason why the demand curve for apples will shift out and to the right? The price of bananas, a substitute good, rises. The price of cereal, a complementary good, falls. Consumer income rises and apples are a normal good. Consumer income falls and apples are an inferior good. The price of apples declines. 13. What impact would a fall in interest rates on loans used to purchase cars have on the demand for cars? The demand for cars would decrease because the interest rate on auto loans is the price of a substitute good. The demand for cars would increase because the interest rate on auto loans is the price of a complementary good. The demand for cars would decrease because the interest rate on auto loans is the price of a complementary good. The demand for cars would increase because gas is the price of a substitute good. The quantity demanded of cars would increase as we move down the demand curve for cars. 14. The quantity demanded of cars will increase if the price of a car falls because: The fall in price of cars leads consumers to buy less of other forms of transportation and raises consumers' real income. The fall in the price of cars leads consumers to buy more of other forms of transportation and raises consumers' real income. The fall in the price of cars leads consumers to buy less of other forms of transportation and lowers consumers' real income. The fall in the price of cars leads consumers to buy less of other forms of transportation while keeping their real income unchanged. The fall in the price of cars leads consumers to buy more small cars but less large cars. 15. Assume we are analyzing the demand cars. What impact would a rise in gas prices have on the demand curve for cars? The demand for cars would decrease because gas is the price of a substitute good. The demand for cars would increase because gas is the price of a complementary good. The demand for cars would decrease because gas is the price of a complementary good. The demand for cars would increase because gas is the price of a substitute good. The quantity demanded of cars would decline as we move up along the demand curve for cars. 16. If a consumer reacts to a rise in the price of beef by purchasing less beef and more chicken, this is because chicken is: A normal good. An inferior good. A substitute good for beef. A complementary good for beef. Both an inferior good and a complementary good for beef. 17. If a consumer reacts to a rise in the price of gas by not using their gas guzzling SUV because they no longer can afford to fill it up, this is an example of: A normal good. An inferior good. The substitution effect. The income effect. An example of a change in tastes. 18. If stock investors anticipate the price of Apple's stock will fall they will Increase their current demand for Apple's stock because they believe it will be selling at a lower price in the future. Decrease their current demand for the stock because they believe it will fall in price. Decrease their future demand for the stock because they believe the price will fall. Decrease both their current and future demand for the stock because they believe the price will fall. Increase both their current and future demand for the stock because they anticipate the price will fall. 19. Which of the following is NOT a reason why the demand curve for new homes might shift in and to the left? The cost of renting, the price of a substitute good, falls. Mortgage interest rates, the price of a complementary good, rise. Home buyers anticipate new home prices to fall in the near future. Household incomes fall and new homes are a normal good. Population increases. 20. What impact would a fall in the price of cars have on the demand for cars? The demand curve would decrease due to the lower price of cars. The demand curve would increase due to the lower price of cars. The quantity demand of cars would decrease as we move up on a given demand for cars. The quantity demanded of cars would increase as we move down a given demand for cars. The quantity demanded of cars would remain unchanged because there are no substitute for car travel.
Explanation / Answer
10. Use contractionary monetary and fiscal policy to contain wage and price inflation.
11. If the consumer income rises, the demand for cars would increase if cars are normal good.
12. The demand for apples would not shift out and to the right if price of apples declines.
13.The demand for cars would increase because the interest rate on auto loans is price for a complementary good.
14. The fall in price of cars leads the consumer to buy less of other transport goods and raises consumer's income.
15. The demand for cars would decrease because the gas price is a price for complementary good.
16. Chicken is a substitute good for beaf.
17. A normal good
18. they will decrease their current demand for stocks because they believe it will fall in price.
19. Home buyers anticipated new home prices to fall in near future.
20. The quantity demand of cars would increase as we move down a given demand for cars.
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