To construct a graph that would enable us to find equilibrium GDP, we would need to plot
a. the consumption-income line
b. a line showing the sum of consumption and investment at each income level
c. the investment spending line
d. the consumption-income line and the government expenditures line
e. an aggregate expenditure line and the 45-degree line from the origin
E
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If positive externalities are present in the production of a good, then society will:
a. produce too much of the good since the marginal private benefit to consumers is less than the marginal social benefit. b. produce too little of the good since the marginal private benefit to consumers is greater than the marginal social benefit. c. produce too much of the good since the marginal private benefit to consumers is greater than the marginal social benefit. d. produce too little of the good since the marginal private benefit to consumers is less than the marginal social benefit.
Historical data depicted on a scatter diagram show that consumer spending and disposable income
A. converge as income grows. B. generally move together. C. diverge as income grows. D. show no clear relationship.
Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. CalculatorsPer HourComputersPer HourSmith10010Jones1206Suppose Smith and Jones begin by producing 100 calculators per hour; as Smith and Jones choose to efficiently produce fewer computers and more calculators, ________ should devote more time to calculators because his ________.
A. Smith; opportunity costs are lower B. Jones; opportunity costs are lower C. Smith; absolute advantage is larger D. Jones; absolute advantage is smaller
If a point lies on the monetary policy reaction curve, and at this point the inflation rate equals the target rate of inflation, we know that:
A. the real interest rate corresponding to this point is below the long-run real interest rate. B. current output is above potential output. C. the real interest rate corresponding to this point is equal to the long-run real interest rate. D. the real interest rate corresponding to this point is above the long-run real interest rate.