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Consider the following statements:
a. Consumers buy more MP3 players from an electronics store that sells MP3 players at a lower price than other rival electronics stores in the area.
b. Schools take steps to increase security since they believe it is more costly to allow vandalism than to hire additional security guards.
c. Citrus growers produce more oranges when the selling price of oranges falls.
Which of the above statements demonstrates that economic agents respond to incentives?
Inverse Relationship
A situation where two variables move in opposite directions, meaning when one variable increases, the other decreases.
Active Macroeconomic Policy
Economic strategies implemented by the government or central bank to stabilize the economy by adjusting spending, taxes, and interest rates.
Expansionary Gap
A situation where the actual output in an economy is greater than the potential output due to high demand.
Nominal Wages
The amount of money an employee is paid before adjustments for inflation, reflecting the current value of money.
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