Suppose a Consumer Purchases Two Goods, and ,And

question 13

Multiple Choice

Suppose a consumer purchases two goods, and ,and that the price of doubles,the consumer's income doubles,and the price of remains unchanged.If good is plotted on the horizontal axis,the budget line

• A) will remain unchanged.
• B) will become steeper.
• C) will become flatter.
• D) will shift out from the origin parallel to the original budget line.

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Definitions:

Supply-Siders

Economics theorists who believe that reducing tax rates and deregulation can stimulate economic growth by increasing supply.

Marginal Tax Rates

The rate at which an additional dollar of income is taxed, indicating the tax impact on your next dollar earned.

Rational Expectations

An economic theory suggesting individuals make predictions about the future based on available information and past experiences in a rational manner.

Stabilization Policy

Government policies aimed at maintaining economic stability through influencing economic growth, reducing unemployment, and controlling inflation.