Author Question: Suppose that macroeconomic forecasters predict that the economy will be expanding in the near ... (Read 77 times)

jparksx

  • Hero Member
  • *****
  • Posts: 570
Suppose that macroeconomic forecasters predict that the economy will be expanding in the near future. How might managers use this information?
 
  What will be an ideal response?

Question 2

Suppose that the interest rate paid to savers increases. As a result, Tom wishes to save less. This suggests that, for Tom,
 
  A) the substitution effect is greater than the income effect.
  B) the income effect is greater than the substitution effect.
  C) utility maximization is not occurring.
  D) future consumption is a luxury.



tofugiraffe

  • Sr. Member
  • ****
  • Posts: 319
Answer to Question 1

Economic expansion increases consumer incomes, which will increase the demand for normal goods and decrease the demand for inferior goods. Thus a producer of normal goods might be anticipating a future increase in demand and thus considering expansion, while a producer of inferior goods might be preparing for a decrease in demand and considering contraction or a movement into a different good line.

Answer to Question 2

B



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

During pregnancy, a woman is more likely to experience bleeding gums and nosebleeds caused by hormonal changes that increase blood flow to the mouth and nose.

Did you know?

Inotropic therapy does not have a role in the treatment of most heart failure patients. These drugs can make patients feel and function better but usually do not lengthen the predicted length of their lives.

Did you know?

When blood is deoxygenated and flowing back to the heart through the veins, it is dark reddish-blue in color. Blood in the arteries that is oxygenated and flowing out to the body is bright red. Whereas arterial blood comes out in spurts, venous blood flows.

Did you know?

The strongest synthetic topical retinoid drug available, tazarotene, is used to treat sun-damaged skin, acne, and psoriasis.

Did you know?

If you use artificial sweeteners, such as cyclamates, your eyes may be more sensitive to light. Other factors that will make your eyes more sensitive to light include use of antibiotics, oral contraceptives, hypertension medications, diuretics, and antidiabetic medications.

For a complete list of videos, visit our video library