One similarity between the beliefs of the classical economists and Keynes is that increased saving would necessarily stimulate an equal amount of increased investment spending
Indicate whether the statement is true or false
False
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If monetary policy must be used to set the market equilibrium value of the exchange rate equal to the official value, it:
A. is no longer available to stabilize the domestic economy. B. will be unable to stabilize the market equilibrium value of the exchange rate. C. will increase the rate of growth in the economy. D. will simultaneously stabilize the domestic economy.
We measure economic growth by the percentage change in real GDP. In general terms outline the course of the U.S. output growth rate in recent decades, both in terms of its trend and its changes around trend
Pay particular attention to the stability of the growth rate.
Explain how it is possible for one of two people in a two-good economy to have an absolute advantage in producing both goods, but trade can still benefit both people
What will be an ideal response?
Suppose Ralph sells bento lunches, which have the following demand:
pR = 100 – qR – 0.5qD where pR is the price of Ralph's bentos and qR is the number of bentos Ralph sells. qD is the number of bentos Ralph's rival, Dave, sells. Dave's demand is given by: pR = 100 – qD – 0.5qR where pD is the price Dave can sell his bentos for. Suppose each seller has a cost per unit (average and marginal) of $1. a. How does this game differ from the Cournot model with identical products? Why do the demand curves indicate that the goods are differentiated – not perfect substitutes for one another? b. Compute the best response functions for each seller and the Nash Equilibrium outputs and prices.