Week 1 Answers
See pp. 17-20
1. Does a change in consumers tastes lead to a movement along the
d emand curve or a shift in the demand curve?
A change in consumers' tastes leads to a shift of the demand curve.
2. Does a change in price lead to a movement a
1. Explain the difference between saving and investment as defined by a
To a macroeconomist, saving occurs when a persons income exceeds his consumption,
while investment occurs when a person or firm purchases new capital, such as a house
1. Which contributes more to GDP the production of an economy car or the production of a
luxury car? Why?
The production of a luxury car contributes more to GDP than the production of an economy car
because the luxury car has a higher market value.
2. A f
1. Who is responsible for setting moneta ry policy in the United States?
H int: Be more specific than The Fed.
The Federal Open Market Commit tee (FOMC) is responsible for setting monetary
policy in the United States.
I n detail, explain who is in this gr
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