In which of the following ways does government affect the consumption component of planned aggregate expenditures?
a. Through net taxes, which change disposable income
b. By purchasing goods and services, which increase consumption
c. By using subsidies to encourage firms to invest
d. By reducing the interest rate to encourage firms to invest
e. By producing public goods
a
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Refer to Figure 16-1. Suppose the economy is in short-run equilibrium above potential GDP and automatic stabilizers move the economy back to long-run equilibrium
Using the static AD-AS model in the figure above, this would be depicted as a movement from A) D to C. B) B to A. C) C to B. D) E to A. E) A to E.
The present discounted value of a future payment can be calculated using which of the following formulas?
A. (Current payment) ÷ [(1 + Interest rate) N]. B. (Future payment) ÷ [(1 + Interest rate) N]. C. [(1 + Interest rate) N] ÷ (Future payment). D. [(1 + Interest rate) N] ÷ (Current payment).
Patti buys a new kind of cereal to try even though it's more expensive than her favorite kind. After a single bowl, Patti decides she does not care for the new cereal at all, and she:
A. throws it away, because she irrationally spent money on something she had no information about. B. forces herself to finish it, because she irrationally focuses on the sunk cost of the cereal. C. forces herself to finish it, because she rationally computes the cost per bowl. D. None of these is likely to happen for the reason stated.
Refer to the diagram for a nondiscriminating monopolist. Marginal revenue will be zero at output:
A. q 1 .
B. q 2 .
C. q 3 .
D. q 4 .