As the economy nears the end of an expansion, which of the following do we typically see?
A) rising firm profits
B) rising levels of firm investment
C) rising interest rates
D) falling wages relative to output prices
Answer: C
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The economic value which can be created by a transaction between two people, Ed (seller) and Luis (buyer), is $50 as Ed's opportunity cost of selling is $135 and Luis' valuation of the good is $185 . If each gains $25 from this transaction, which of the following conclusions can be drawn?
a. Transaction costs are zero. b. Luis has higher bargaining power than Ed. c. Ed has higher bargaining power than Luis. d. Transaction costs are positive.
Explain the concept of market failure
Very high debt burdens can result in
A) fine tuning. B) automatic stabilizer. C) the structural deficit. D) tax smoothing. E) debt repudiation.
Refer to the information provided in Table 24.4 below to answer the question(s) that follow.
Table 24.4
Refer to Table 24.4 At the equilibrium level of income, leakages equal ________ billion.
A. $0 B. $100 C. $200 D. $400