This Application addresses the economic concept of
A) procyclical investment. B) financial intermediaries.
C) present value. D) the multiplier-accelerator model.
C
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Expressing the U.S. federal budget deficit as a percentage of Gross Domestic Product (GDP)
A) results in inflation-adjusted revenue and expenditure numbers. B) helps us understand the size of the deficit relative to the size of the economy. C) was useful through the 1980s, but is no longer helpful because both the deficit and real Gross Domestic Product (GDP) have grown so large. D) is only useful if the budget deficit is rising at an annual rate of more than 4 percent.
When a person possesses a comparative advantage in the production of one good or service, it: a. means that the person's opportunity cost of producing that good or service is higher than for that of other goods. b. discourages specialization
c. promotes greater self-sufficiency. d. permits gains from trade to be realized due to a more efficient use of resources.
Which of the following is true regarding value and exchange?
a. Middlemen fail to create value since they do not expand the supply of physical goods. b. A good or service has a given value regardless of who uses it or how it is used. c. If it were not for middlemen, transaction costs would be zero. d. Voluntary exchange creates value by channeling goods into the hands of people who value them most.
Suppose that the price of a bottle of soda is $2. Vonda's marginal cost of production is $1.25 for the first bottle, Galiela's marginal cost of production is $1.50 for the second bottle, Gretchen's marginal cost of production is $1.75 for the third bottle, and Matt's marginal cost of production is $2 for the fourth bottle. Which producer gets no producer surplus?
A. Vonda B. Galiela C. Gretchen D. Matt