Where Y is GDP, C is consumption, I is investment, G is government purchases, and there is no international trade, national saving equals:
A. Y - C - G.
B. Y + C + G.
C. Y - C - I.
D. C + I + G.
Answer: A
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When the price of a good changes, the substitution effect occurs because:
a. the consumers' real income measured in terms of that good changes. b. the relative price of that good changes compared to other goods in the consumption bundle. c. the total utility of that good decreases. d. the marginal utility of that good decreases. e. consumers have an incentive to substitute irrational behavior for rational behavior.
Assume that you invest $550 in a certificate of deposit that has an annual interest rate of 4.5 percent. According to the rule of 72, what will your investment be worth after 16 years?
a. $550 b. $3,960 c. $1,100 d. $797.5 e. $1,200
In the 1990s, the United States benefited from a series of favorable supply shocks. This caused a(n)
a. increase in inflation and unemployment. b. decrease in inflation and unemployment. c. increase in inflation and a decrease in unemployment. d. decrease in inflation and an increase in unemployment.
If coal mining produces a negative externality because it leads to environmental damage, then, at the market equilibrium, the:
A. quantity of coal produced will be greater than the socially optimal quantity. B. quantity of coal produced will be less than the socially optimal quantity. C. supply curve will lie to the left of the regulated supply curve. D. price of coal will be higher than the socially optimal price.