Answer the following statements true (T) or false (F)
1. Inventory depletion can lead to increased production.
2. During the expansion phase of the business cycle, profit margins increase due to a widening cost-price relationship.
3. Population growth and wars are examples of external forces affecting the economy’s cyclical movements.
4. As the economy moves into the trough of the business cycle, there is a sizable reduction in the output of capital goods.
5. The roughly coincident indicators have their upward and downward turning points prior to the upward and downward turning points of real GDP.
1. TRUE
2. TRUE
3. TRUE
4. TRUE
5. FALSE
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If a country has a large deficit in its current account
A) it has a large surplus in its financial account. B) it exports more than it imports. C) it is a net creditor to the rest of the world. D) None of the above are necessarily true.
Which of the following is a determinant of supply?
A) tastes and preferences of consumers B) technology C) consumer income D) number of consumers
An indication that Insurance companies anticipate adverse selection is
a. they do not require a deductible b. they do not classify clients into different risk types according to their claim history c. they do not classify clients into different risk types according to pre-existing conditions d. they require a co-payment
Suppose a consumer's utility function is U(F0, F1) = F00.6F10.4, where F0 represents food consumed this year and F1 represents food consumed next year. For that utility function, the marginal utility of food consumed this year is 0.6 × (F1/F0)0.4 and the marginal utility of food consumed next year is 0.4 × (F0/F1)0.6. Which of the following expressions gives the consumer's marginal rate of substitution for food this year with food next year (MRS01)?
A. MRS01 = F1/F0 B. MRS01 = (2/3) × (F0/F1) C. MRS01 = (2/3) × (F1/F0) D. MRS01 = (3/2) × (F1/F0)