Consumption is
A. positively related to household income and wealth, interest rates, and households' expectations about the future.
B. determined only by income.
C. positively related to household income and wealth and households' expectations about the future, but negatively related to interest rates.
D. negatively related to household income and wealth, interest rates, and households' expectations about the future.
Answer: C
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A common resource is used efficiently if
A) the output is maximized. B) marginal social benefit equals marginal social cost. C) marginal private benefit equals marginal private cost. D) marginal social benefit is maximized.
When the housing bubble popped, the effect of the negative demand side shock and the negative supply side shock were the same on:
A. output, causing it to definitely decrease. B. prices, causing them to definitely rise. C. output, causing it to definitely increase. D. prices, causing them to definitely fall.
"Hicks' Third Law of Demand" states that "most" goods must be:
a. gross substitutes. b. gross complements. c. net substitutes. d. net complements.
If the marginal propensity to consume (MPC) is 0.50, the value of the spending multiplier is:
a. 5. b. 1. c. 2. d. 5.