Other things equal, an increase in the consumer confidence index tends to raise the average propensity to consume
a. True
b. False
Indicate whether the statement is true or false
True
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One reason why an economy may not smoothly adjust to a macroeconomic shock is that
A) prices are flexible in the long run. B) prices are sticky in the short run. C) wages are sticky in the long run. D) prices and wages are sticky in the long run.
The compound growth rate formula is used to estimate how long it will take for a number to double for a given growth rate
a. True b. False Indicate whether the statement is true or false
Marissa owns a small cottage by the lake. Big Boy’s Sawmill is next door, and it dumps sawdust into a sinkhole it owns. Unfortunately for Marissa, the sinkhole opens into a brook on her land, which gets clogged by the sawdust. It costs Marissa $3,000 per year to clean up the sawdust. Big Boy’s can dispose of the sawdust by having it hauled away for $2,000 per year. Marissa offers to pay Big Boy’s $2,500 per year to have the sawdust hauled away. In this example of the Coase theorem, what is the annual pecuniary cost to society of negative externality before any transaction occurs between Marissa and Big Boy’s?
a. $2,000 b. $2,500 c. $3,000 d. $5,000
High economic growth of a country refers to