The Current Demand for Automobiles Would Decrease If

question 382

Multiple Choice

The current demand for automobiles would decrease if

• A) the price of gasoline fell.
• B) consumer income rose.
• C) consumers suddenly believed the price of automobiles would be sharply lower in the near future.
• D) consumers suddenly believed the price of automobiles would be sharply higher in the near future.

Interpret the significance of the marginal rate of substitution and how it varies along indifference curves.

Identify conditions under which consumers' preferences are convex.

Apply the concept of indifference curves to analyze scenarios involving choice under uncertainty or specific rules (e.g., grading policies).

Understand how indifference curve analysis can explain consumer choices in terms of bundles of goods.

---

Definitions:

Recessionary Policy

Economic policies implemented to combat recession, often involving increased government spending and decreased taxation.

Aggregate Demand

The entire market's craving for goods and services within an economic territory, calculated at a fixed price level and within a set timeline.

Expansionary Gap

A situation in an economy where the real GDP is higher than the potential GDP, often leading to inflation.

Active Approach

A strategy, especially in investing or management, where decisions are made based on hands-on involvement and regular assessment of conditions.