Both the PIH and the LCH Predict That

question 36

Multiple Choice

Both the PIH and the LCH predict that

• A)the sum of saving and consumer durable purchases should increase in relation to personal income in booms and fall in recessions.
• B)the sum of saving and consume nondurable purchases should increase in relation to personal income in booms and fall in recessions.
• C)the sum of saving and consumer durable purchases should decrease in relation to personal income in booms and increase in recessions.
• D)saving should increase in relation to personal income in booms and fall in recessions,but that consumer durables tend to behave in a more stable manner over a cycle.

Understand how to apply demand and supply functions to determine market equilibria.

Analyze the effects of taxes on market equilibrium, including the impact on quantities supplied and demanded.

Assess the impact of taxes on the equilibrium price paid by consumers and received by producers.

Understand the concept of elasticity and how it affects market outcomes.

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Definitions:

Lemons

In the context of economics, refers to products of lower quality that are difficult to distinguish from higher quality products before purchase. In a general context, it's a citrus fruit.

Expected Value

A statistical concept that calculates the average outcome of a random event when the process is repeated many times.

Dipstick

A tool used for measuring the quantity or level of fluid in a reservoir, notably oil in an engine.

Al Crankcase

Aluminium crankcase refers to the housing for the crankshaft in a reciprocating internal combustion engine, made from aluminum.