Suppose an economist is analyzing the impact of a budget deficit used to finance a significant infrastructure project that will pay significant dividends in the coming years. That economist will focus on
A. strictly the inflation-adjusted amount borrowed.
B. strictly the amount borrowed.
C. both the ratio of the deficit to GDP and whether what is purchased with the borrowed money will produce enough gains to be worth that borrowed.
D. strictly the ratio of the deficit to GDP
Answer: C
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All points on an indifference curve represent combinations of two goods that are equally desirable to the consumer.
Answer the following statement true (T) or false (F)
If the cross-price elasticity of demand for two goods is -4.5, then
a. the two goods are substitutes. b. the two goods are complements. c. one of the goods is normal while the other good is inferior. d. one of the goods is a luxury while the other good is a necessity.
Two identical firms compete as a Cournot duopoly. The demand they face is P = 100 ? 2Q. The cost function for each firm is C(Q) = 4Q. The equilibrium output of each firm is:
A. 32. B. 36. C. 16. D. 8.
Suppose that with 1 unit of labor, Canada can produce 40 TVs or 20 computers. With 1 unit of labor, Taiwan can produce 30 TVs or 10 computers. Which of the following is correct?
A. Taiwan has a comparative advantage in the production of computers. B. Canada has an absolute advantage in the production of neither good. C. Canada has a comparative advantage in the production of computers. D. Taiwan has an absolute advantage in the production of computers. E. Taiwan has an absolute advantage in the production of TVs.