Consider the following statements, based on a positive economic analysis that assumes that all other things remain constant. For each, list one other thing that might change and thus offset the outcome stated.
Part 2
a. Increased demand for laptop computers will drive up their price.
A.
A decrease in the supply of laptop computers.
B.
An improvement in computer manufacturing technology.
C.
An increase in consumer income.
A. An increase in the supply of laptop computers.
wrong answer
A. An increase in the supply of laptop computers from manufacturers due to increased demand.
b. Falling gasoline prices will result in additional vacation travel.
A.
Consumer incomes increase.
B.
The airlines engage in a price war that leads to lower airfares.
C.
The economy enters a recession with increased unemployment.
B. The airlines engage in a price war that leads to lower airfares
No, C is the answer
C. The economy enters a recession with increased unemployment.
A.
Lower interest rates lead to a boom in housing construction.
B.
The foreign exchange value of the dollar increases causing domestic exports to decline.
C.
Congress passes a huge appropriations bill leading to increased government spending.
A. Increased government regulations on housing construction.
B. The foreign exchange value of the dollar decreases, causing domestic exports to increase.
C. Congress passes a budget cut bill leading to decreased government spending.
c. A reduction of income tax rates will result in more people working.
A.
Lower interest rates lead to a boom in housing construction.
B.
The foreign exchange value of the dollar increases causing domestic exports to decline.
C.
Congress passes a huge appropriations bill leading to increased government spending.