When the price level is considered, the value of the multiplier will be less than that suggested by the oversimplified version of multiplier. Why?
What will be an ideal response?
As long as the aggregate supply curve slopes upward, any increase in aggregate demand will push up the price level. Higher prices, in turn, will drain off some of the higher real demand by eroding the purchasing power of consumer wealth and by reducing net exports. Thus, inflation reduces the value of the multiplier below what is suggested by the oversimplified formula.
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In the one-input model, the marginal product of labor curve falls below the horizontal axis only if the production frontier slopes down.
Answer the following statement true (T) or false (F)
What is asymmetric information?
What will be an ideal response?
Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day. Ethel can produce a maximum of eight pies or two cakes in a day. Ethel has an comparative advantage in the production of
A) cakes. B) pies. C) both cakes and pies. D) neither cakes nor pies.
Refer to the information provided in Table 6.2 below to answer the question(s) that follow. Table 6.2Number ofCandy Bars per DayTotal UtilityMarginal Utility140?275?3100?4115?5?5Number ofHot Dogs per DayTotal UtilityMarginal Utility130?254?372?484?5?6Refer to Table 6.2. Diminishing marginal utility sets in after the ________ candy bar per day.
A. first B. second C. third D. fourth