Economic studies of lottery winners and people who have inherited large amounts of money show that
a. the income effect of winning the lottery or inheriting large amounts of money likely outweighs the substitution effect for most people.
b. the substitution effect of winning the lottery or inheriting large amounts of money likely outweighs the income effect for most people.
c. most people view leisure as an inferior good.
d. most people's labor supply is unaffected by changes in wealth.
a
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You are given the following information about aggregate demand at the existing price level for an economy: (1) consumption = $500 billion, (2) investment = $50 billion, (3) government purchases = $100 billion, and (4) net exports = $20 billion. If the full-employment level of GDP for this economy is $620 billion, then what combination of actions would be most consistent with closing the GDP-gap here?
A. An increase in government purchases and a decrease in taxes B. A decrease in government purchases and taxes C. An increase in government purchases and taxes D. A decrease in government purchases and an increase in taxes
Happy Bagels sells its bagels for $6 each and the firm has a constant marginal cost of $4 per bagel, which is equal to its (constant) average total cost. If Happy Bagels does not sell a bagel the day it is produced, the bagel is sold as day-old for $2. If Happy Bagels is currently holding 50 bagels in inventory and the probability that Happy Bagels will sell 50 bagels or more is 0.60, which of
the following statements is true? A) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to increase its inventory. B) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to decrease its inventory by exactly one -half. C) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to decrease its inventory. D) Happy Bagels is holding the profit-maximizing, optimal level of inventory.
The income-expenditure identity for an open economy is:
A. Im ? Ex = C + I. B. Y = C + I + G. C. Y + G = C + I ? NX. D. Y = C + I + G + NX.
Expansionary monetary policy involves an increase in the money supply and a fall in interest rates, leading to a positive expansion in income
Indicate whether the statement is true or false