Explain how expectations affect consumption
What will be an ideal response?
Expectations affect consumption in two ways. First, expectations affect consumption directly through human wealth: To compute their human wealth, consumers have to form their own expectations about future labor income, real interest rates, and taxes. Second, expectations affect consumption indirectly, through nonhuman wealth-stocks, bonds and housing: The prices of these assets depend on expectations of future cash flows and interest rates.
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Politicians have often kissed babies to improve their re-election prospects. A rational politician will kiss babies as long as
A) the public is impressed. B) the marginal benefits exceed the marginal costs. C) there is a camera crew to document the activity. D) the babies are cute.
Which of the following statements is true regarding protocols in various types of auctions?
a. An English auction requires bidders to begin with the highest price. b. A Dutch auction starts with the lowest price any bidder is willing to pay, which is displayed in a one-handed clock. c. In a Dutch auction, the first buyer to bid gets the item at the price shown in the one-handed clock. d. In a second-price auction, the second-highest bidder gets the item.
Which of the following is a macroeconomic question?
A. Should we have a constitutional amendment requiring the government to implement a national consumption tax to replace the current income tax? B. Why did a leading computer manufacturer establish call centers in India? C. Why does a pharmaceutical manufacturer try to lower its production costs? D. Should the government put a tax on alcohol in an attempt to assist in the funding of support groups like Alcoholics Anonymous?
As noted in the text, the major Japanese auto manufacturers agreed to "voluntary" import restrictions that reduced the number of cars they could ship to the U.S. market in the 1980s
One of the key outcomes from this policy is that the Japanese manufacturers were able to: A) focus on more profitable auto markets in other countries. B) raise their prices of autos in the U.S. market and capture higher profit margins on the imported cars. C) cut their costs by more than the import tariff, so profit per auto increased. D) all of the above