To Test the Theory That If the Price of Pens

question 37

Multiple Choice

To test the theory that if the price of pens rises, then pen purchases fall, an economist would

• A) collect data on the price of pens and the price of pencils because the two goods are substitutes.
• B) investigate whether people purchase more pens when their income rises.
• C) analyze data on pen purchases linked to the price of pens, holding other factors constant.
• D) ask his or her friends if they would buy fewer pens when the price rises.

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Definitions:

Price Level

A general measure of the cost of goods and services within an economy or specific market at a given time.

Real GDP

The total value of all goods and services produced within a country in a year, adjusted for inflation, reflecting the real purchasing power.

Aggregate Demand

The cumulative requests for goods and services in an economy, aimed at a fixed price level within a set timeline.

Long-Run Effect

The impact of economic policies or events that become apparent and have a sustained influence over an extended period.