Why would consumer decrease consumption even if their disposable income has not changed?
What will be an ideal response?
If consumers start worrying about the future and decide to save more, they will decrease c0 and hence consumption. This is what happened at the start of the most recent financial crisis.
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The point where the indifference curve is tangent to the budget line
A) is the best affordable point. B) is where the marginal rate of substitution exceeds the relative price by as much as possible. C) is a point on consumer's demand curve. D) All of the above answers are correct.
Compared to the past, FOMC meetings are now much more transparent. How might this transparency impact the effectiveness of monetary policy actions?
A) The transparency helps make the Fed's actions more credible and should help make policy actions more effective. B) The transparency undermines the effectiveness since financial markets can more quickly adjust their behavior to fight the policy actions. C) The transparency counteracts the secrecy in which fiscal policy is enacted, and therefore decreases its effectiveness. D) The transparency lengthens policy lags, so monetary policy takes longer to implement and take effect.
The marginal cost of a vacation in Jamaica is $3,500 . The marginal benefit to Jordan of a vacation in Jamaica is $3,000. a. According to the rule of rational choice, Jordan should choose not to vacation in Jamaica at this time
b. According to the rule of rational choice, Jordan will experience a net gain of $500 if he vacations in Jamaica. c. According to the rule of rational choice, Jordan should borrow $500 and vacation in Jamaica. d. According to the rule of rational choice, Jordan will experience a net gain of $3,000 if he vacations in Jamaica.
The manager of Greene Enterprises, Inc., recently estimated its average variable cost (AVC) function to beAVC = 88 - 0.026Q + 0.000003Q2Greene Enterprises faces total fixed costs (TFC) of $300,000. When Greene Enterprises produces 6,000 units, average variable cost (AVC) is ________.
A. $72.46 B. $55 C. $60 D. $49.62 E. $40