Consider the Following Three Concepts

question 8

Multiple Choice

Consider the following three concepts:
I. Marshallian Demand [x = x(p_x,,p_y ,I) ]
II. Indirect Utility [V = g (p_x,,p_y ,I) ]
III.Compensated Demand [x = x^c (p_x,,p_y ,U) ]
Which of these functions is necessarily homogeneous of degree zero in all its argument?

• A)All of them.
• B)None of them.
• C)Only I.
• D)I and III,but not II.

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Definitions:

Index of Leading Indicators

A composite statistic of several economic indicators that predict future economic activity and health.

Forecasting Device

A tool or software used to predict future conditions or trends based on historical and current data analysis.

Phillips Curve

An economic concept that depicts an inverse relationship between the rate of inflation and the rate of unemployment over the short term.

Inflation

The measure at which prices for general goods and services escalate, devaluing the purchasing power.