Tastes are assumed to be identical across countries to rule out differences in demand determining the direction of trade
Indicate whether the statement is true or false
TRUE
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When stock prices fall significantly, people may feel less wealthy and thus decide to consume less of their current flow of disposable income. In our consumption function, this can be represented by a
A) fall in (Y - T). B) rise in T. C) rise in c. D) fall in a.
In a pure capitalist economy, "what to produce" is determined by
A. government central planning committees. B. the price mechanism. C. the credo: "Each according to his ability, to each according to his needs". D. all of the choices are true.
An increase in aggregate demand due to higher foreign income will cause:
a. domestic equilibrium GDP to increase. b. domestic equilibrium GDP to decrease. c. domestic prices to fall. d. foreign prices to fall. e. foreign equilibrium GDP to fall.
Which of the following statements best describes consumer confidence as measured by the consumer confidence index, from just prior to the Great Recession until late 2008.
a. According to the consumer confidence index, consumer confidence averaged around 90 prior to the Great Recession, and then it fell to below 50 in late 2008, which was the lowest it had been since 1980. b. According to the consumer confidence index, consumer confidence averaged around 80 prior to the Great Recession, and then it fell to below 50 in late 2008, which was the lowest it had been since 1980. c. According to the consumer confidence index, consumer confidence averaged around 90 prior to the Great Recession, and then it fell to below 60 in late 2008, which was the lowest it had been since 1980. d. According to the consumer confidence index, consumer confidence averaged around 80 prior to the Great Recession, and then it fell to below 60 in late 2008, which was the lowest it had been since 1980.