During 2009, incomes feel sharply due to the financial crisis of 2008-2009. This change likely led to a decrease in the demand of both normal and inferior goods. Do you agree or disagree with the statement. Justify your answer.

During 2009, incomes feel sharply due to the financial crisis of 2008-2009. This change likely led to a decrease in the demand of both normal and inferior goods. Do you agree or disagree with the statement. Justify your answer.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter4: Prices: Free, Controlled, And Relative

Section: Chapter Questions

Problem 8QP

See similar textbooks

Related questions

Q: Describe the role of pricing during periods of inflation and recession

A: A recession is a period of an economic slowdown that continues for consecutive quarters. Recession…

Q: A government takes action to reduce the size of its budget deficit. This action will cause the…

A: Meaning of Budget Deficit: The term budget deficit refers to the situation under which the…

Q: For the following questions, make use of provided information. Since the peak of the pandemic…

A: Overnight Interest Rate The overnight interest rate is used to control inflation in an economy. It…

Q: If interest rates increase in financial markets, then... Group of answer choices Eli’s trucking…

A: Interest rates in the proportion of the total amount that a borrower pays to the lender for…

Q: Question 5 According to Neoclassical economics O fiscal policy is required because markets are…

A: Neoclassical economics refers to one approach to deal with market uncertainties as it is the…

Q: Based on the impact of a drop in the discount rate on the supply of money in the market. select an…

A: Money supply: It is the total stock of money in circulation at a point in time and the money supply…

Q: Which of these are characteristics of the economy that led to the Crash of 1929? New roads and…

A: These are characteristics of the economy that led to the Crash of 1929. More companies offer…

Q: Milton Friedman argued nearly all economic fluctuations were caused by Multiple Choice sticky…

A: The correct option is money supply. Milton Friedman argued nearly all economic fluctuations were…

Q: When the price level falls households want to lend more, so the interest rate rises making the…

A: Demand is done by the consumers at given prices during given duration. Supply is done by the…

Q: Explain why a sudden, large burst of inflation could lead to a recession?

A: Inflation is the continuous rise in the price level of commodities in a nation over a period of…

Q: Why has Supply Side Economics not yielded the results envisioned by its proponents?

A: The supply-side theory is associate in economic thought whereby increasing the availability of…

Q: Firms require capital to invest in productive opportunities. The best firms with the most profitable…

A: A monetary policy that brings down the rate of (i)interest and invigorates acquiring is known as an…

Q: Monetary policy For the first time since 2006, the Federal Reserve voted to raise interest rates by…

A: The financial crisis occured because of the excessive amount of leverage taken by the banks without…

Q: Banks follow the Fed’s lead to influence the economy and prevent a financial downturn? True or false

A: Fed is the supervisor of all the banks in the nation.

Q: Which of the following is the result of more M1 in the economy? A. rising prices due to more money…

A: In an economy, M1 money supply is the total money available with the household and liquid money held…

Q: Rational expectations theory assumes Multiple Cholce consumer behavior is static. consumers will…

A: Consumer behavior is not static, consumers form their expectation according to RE, consumers use all…

Q: The policies of the federal government influence the outcomes of the various activities in that…

A: (Q) The policies of the federal government influence the outcomes of the various activities in that…

Q: In the monetary perspective: -Discretionary monetary policy is the most effective way to moderate…

A: Monetary policy: The monetary policy is adopted by the central bank to endure the price stability…

Q: the Federal Reserve raises the discount rate, the Federal Reserve is enacting

A: Discount rate is the interest rate charged by the central bank for the loans provided by it to the…

Q: Predict how each of the following economic changes will affect the equilibrium price and quantity in…

A: Whenever demand rises, the demand curve will shift to the right and whenever demand falls, the…

Q: describe the actions the Federal Reserve took to maintain a healthy economy during the recent…

A: Fed has done so much to prevent the economy from slowing down during the economic crises as an…

Q: The multiplier model assumes that the price level is: fixed. neither rigidly fixed nor perfectly…

A: The theory that stated that the economy would tend to flourish more when the government tends to…

Q: When the demand for money is greater than the supply of money: A) people offering to…

A: Money demand is the demand for cash balances by the individuals in the economy.Money supply is the…

Q: Explain briefly the following three principles of economics by Mankiew. 1- Rational people think at…

A: The principles of economics include: There is a trade-off faced by people. The cost of something is…

Q: Johnson & Johnson’s 1982 Tylenol recall was huge in both scope and cost. Adjusted for inflation, the…

A: * ANSWER :- * (b) Five cases of product recall is

Q: The buying power of a dollar increases when more money is available?? True or false

A: Buying power is also known as Purchasing power Purchasing power refers to the number of goods and…

Q: In the late 3rd century AD, Diocletian rose to assume the throne of the Roman Empire. At the time,…

A: Price Ceiling refers to the maximum price that the suppliers or sellers are allowed to charge the…

Q: the money supply is $60 and nominal GDP is $360, then Group of answer choices A) the velocity of…

A: Nominal GDP is the market value of goods and services produced within an economy using current…

Q: Some form of financial distress can become a full-blown recession if risk lead to ____ interest…

A: Recession is a period significant decline in economic activity. It is characterized by decline in…

Q: Assume the economy is characterized by rational expectations. If the Federal Reserve seeks to…

A: Considering the rational expectations of the consumers in the economy, when the federal reserve try…

Q: Please answer ASAP this is a very short question Before the Civil War, _____, not the U.S.…

A: Before the Civil War US government did not print money.

Q: When the inflation rate is expected to increase, the real cost of borrowing at any…

A: The rate of interest is the amount of payment that is charged by a lender on a borrower for the use…

Q: For the following questions, make use of provided information. Since the peak of the pandemic…

A: If the FOMC would be increasing the interest rates by the 50 basis points, it would only attract the…

Q: Why did the housing market get so cheap during the economic crash

A: Housing market plays an important parts in country's economy. Housing prices effects the economic…

Q: Increase in interest rates causes the supply curve to shift. Monetary expansion causes a decrease in…

A: In the loanable funds market, money supply implies the availability of money to lend and money…

Q: According to classical economists: A.wages, prices and interest rates are flexible. B.only nominal…

A: According to classical economists, economy will adjust itself quickly to any Market recession.

Q: Assuming all else equal, the following happens in the economy. “Wages have grown more slowly than…

A: Rise in labor costs means increase in cost of production. As costs of production increase, in short…

Q: State whether True or False and "explain" (answers without explanation get no credit): Demand for a…

A: The relative change in quantity demanded owing to a change in price is measured by price elasticity…

Q: Explain and show graphically how a tax increase reduces demand and increases unemployment. Why is…

A: Answer -

Q: Macropoland is currently experiencing a recession--consumption and investment are very sluggish, and…

A: Fiscal policy deals with altering the tax rate or/and government spending to make adjustment in the…

Q: A student who cashes a check at the student union in order to go shopping illustrates an example of…

A: In financial hypothesis, explicitly Keynesian financial aspects, speculative demand is one of the…

Q: For each of the following statements, say whether they are True or False, and explain your answer…

A: Since, the question includes multiple sub parts, we will be answering the first 3 parts for you. If…

Q: The Fed increased the target rate of the federal funds rate nine times since December 2015 through…

A: The federal funds rate refers to the interest rate that one commercial bank charge other commercial…

Q: mall businesses are facing increasing challenges as the fourth wave of the pandemic looms. New…

A: The current state of the South African corporate landscape, as well as a company plan for mitigating…

Q: When the Fed buys bonds (or bond options) on a larger scale (than before) from private banks,…

A: Open market operations are one of the tools that the Fed uses to manage the money supply across the…

Question

"During 2009, incomes feel sharply due to the financial crisis of 2008-2009. This change likely led to a decrease in the demand of both normal and inferior goods. Do you agree or disagree with the statement. Justify your answer.

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Agree or disagree, during 2009, income fell sharply due to the financial crisis of 2008-2009. This change likely led to decrease in price of both normal and inferior goods.
People can buy houses which are in the process of being built. What would happen to demand for such houses if it was discovered that an asteroid was definitely going to hit the earth next week and wipe out all life on the planet? Which of the five reasons do you use to justify your answer.
How does a sudden decrease in consumer confidence due to a significant political event impact the demand for luxury goods in an economy?
Which of the following choices is not a reason why consumers choose substitute goods and services for the items that they intended to purchase? The good or service that they intend to buy is on sale. The expectations are not met. The good or service is popular. The price of the good or service is high.
What is one consumer food or service for which in the last 10 to 15 years consumers preference has actually increased, and still, the price has decreased. Based on all the supply and demand determinants, what is a possible reason that could cause the decrease in the price of the suggested good.
During 2009, incomes fell sharply due to the financial crisis of 2008-2009. This change likely led to a decrease in the prices of both normal and inferior goods.
Which of the following are true regarding inferior goods?Choose all that are correct. Group of answer choices Inferior goods are goods for which demand will decrease following an increase in consumer income. Inferior goods are goods for which demand will increase following an increase in consumer income. Inferior goods are goods for which demand will increase following a decrease in consumer income. Inferior goods are goods for which demand will decrease following a decrease in consumer income.
I need handwritten only with explanation Which of the following does not have an immediate effect on the price of oil ? Group of answer choices Political tensions in the Middle East. Discovery of the new deposits of oil. Increase in efficiency in the automotive industry
According to statistics, people in their teens (15 years) will buy 12 CDs and 15 cheese pizza in a year. If cheese pizza is a secondary good, is this consumer indifferent between getting a $ 30 gift voucher at a local CDs store and $ 30 in cash? Explain. Thank you for taking a look at my question.
What is wrong with this statement? Demand refers to the willingness of buyers to purchase different quantities of a good at different prices during a specific time period.
If buyers expect the price of a good will be lower in the future, then? Group of answer choices the current demand for the good decreases the market will act to buy more goods now the current supply of the good increases because fewer people buy it. the current quantity demanded increases there is no impact on the demand for the good
Why expectation for future prices is one of the factors that can affect supply?