Author Question: Suppose that macroeconomic forecasters predict that the economy will be expanding in the near ... (Read 79 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?

Between 1999 and 2012, American adults with high total cholesterol decreased from 18.3% to 12.9%

Did you know?

More than 50% of American adults have oral herpes, which is commonly known as "cold sores" or "fever blisters." The herpes virus can be active on the skin surface without showing any signs or causing any symptoms.

Did you know?

Always store hazardous household chemicals in their original containers out of reach of children. These include bleach, paint, strippers and products containing turpentine, garden chemicals, oven cleaners, fondue fuels, nail polish, and nail polish remover.

Did you know?

Despite claims by manufacturers, the supplement known as Ginkgo biloba was shown in a study of more than 3,000 participants to be ineffective in reducing development of dementia and Alzheimer’s disease in older people.

Did you know?

For pediatric patients, intravenous fluids are the most commonly cited products involved in medication errors that are reported to the USP.

For a complete list of videos, visit our video library