Answer the following statement(s) true (T) or false (F)
1. Changes in investment must be planned in order to affect real GDP.
2. Aggregate expenditures have historically been especially important to the economy in the short run.
3. Consumer spending can increase even if disposable income remains fixed.
4. Pretax income is considered an autonomous factor.
5. Marginal propensity to consume refers to how much you tend to spend on consumer goods and services out of your additional disposable income.
1. False
2. True
3. True
4. False
5. True
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A price cap regulation ________
A) is illegal B) is a price floor C) is a price ceiling D) encourages a firm to operate inefficiently
Consternation Corporation has an agreement with its workers to index completely the wage of its employees using the CPI. Consternation Corporation currently pays its production line workers $7.50 an hour and is scheduled to index their wages today. If the CPI is currently 130 and was 125 a year ago, the firm should increase the hourly wages of its workers by
a. $0.04. b. $0.29. c. $0.30. d. $0.50.
The television network newscaster reports that the national inflation rate the past year equaled 4 percent. This report would be of particular interest to a
A. microeconomist. B. normative economist. C. macroeconomist. D. social science economist.
Imagine you own a business and that during the next recession you lay off 20 percent of your workforce. Once economic activity picks up and your sales begin to increase, why might you not immediately start rehiring workers?
A. Before rehiring you would like to make sure that this economic expansion lasts. B. Due to inflation that occurs during an economic recovery, you will have to pay higher wages to new workers C. To better protect your self from a future recession, you would like to use more capital intensive technology D. You would like to recover your profit that you lost during the recession and would not like to increase labor cost.