1. Suppose your nominal income increases by 5 percent at the same time that infl

Question

1. Suppose your nominal income increases by 5 percent at the same time that inflation is 6 percent. Then, ceteris paribus: a) your real income also increased by 5 percent b) your real income increased by 1 percent c) your nominal income really decreased by 1 percent. d) your real income decreased by 1 percent e Noneof the above 2. As consumer incomes rise, the demand curve forgood X shifts to the left. Given this, GoodX must be: a) an inferior good b) aluxurygood c) a substitutegood d) anormal good 3. Which is an example of an automatic stabilizer? As real GDP decreases, in come tax revenues: a) Decrease and transfer payments in crease b) Increase and transfer payments decrease c And transfer payments decrease d) Andtransfer payments increase e Noneof the above 4. From an economic perspetive when a consumer decides to buy more life in surance, the consumer has most likely concluded that the a) b) c) Opportunity costs of more insurance coverage are greater than the payment for more insurance coverage Marginal benefits of moreinsurance coverage are greater than the marginal costs Marginal costs of more insurance coverage have decreased

Explanation / Answer

Answer.)

Q1.) d.) Your real income decreased by 1%

Q2.) a.) inferior good

Q3.) a.) decreases and transfer payments increase.

Q4.) b.) Marginal benefits of more insurance coverage are greater than the marginal costs

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