Assume a closed economy. Suppose the incremental capital-output ratio is 3, and the depreciation rate is 4%
Using the Harrod-Domar growth equation, if the savings rate is 9%, what will be the rate of growth? What would the savings rate have to be to achieve 5% growth?
–1%; 27%.
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If a household has an income of $40 and buys only bus rides at $2 each and magazines at $4 each, what is the equation of the household's budget line?
What will be an ideal response?
Everything else held constant, a decrease in government spending will cause the IS curve to shift to the ________ and aggregate demand will ________
A) right; increase B) right; decrease C) left; increase D) left; decrease
Relative to a mobile factor of production, economic theory suggests that the price elasticity of supply for a highly immobile factor of production (for example, land) will be
a. more elastic. b. less elastic. c. of unitary elasticity. d. this is a trick question; the price elasticity of supply for factors of production is not affected by factor mobility.
Total revenue minus both explicit and implicit costs defines a firm's:
A. profit. B. net worth. C. gross earnings. D. marginal earnings.