Figure 15.2 depicts a one-mile stretch of beach with 100 swimmers distributed evenly along the beach. There are two ice cream vendors - 1 and 2 - on the beach selling an identical product. Assume that each swimmer buys only one ice cream cone and that they prefer to buy ice cream from the nearer vendor. If neither vendor has an incentive to adjust their locations:
A. vendor 1 is at B while vendor 2 is at D.
B. vendor 1 is at A while vendor 2 is at C.
C. vendor 1 is at A while vendor 2 is at D.
D. both vendors are at C.
Answer: D
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The two major curves or lines in the TE-TP diagram are:
A) the total expenditure curve and the 45-degree line. B) the supply and demand curves. C) the total expenditures and national income curves. D) the total production and national income curves.
A(n) ________ is an effort to kick-start the economy by increasing government spending or lowering interest rates.
A. speculative bubble B. austerity measure C. financial crisis D. economic stimulus
In response to the “Great Depression 2.0,” the Obama administration responded with more tax cuts, increased federal spending, and aid to state and local governments.
Answer the following statement true (T) or false (F)
The expenditure multiplier
a) is defined as the inverse of the savings rate b) is greater than zero but less than one c) does not depend on consumption behavior d) is larger in a country with a large MPC than in a country with a small MPC e) determines the effect on consumption from an increase in disposable income