What is the impossibility theorem?
What will be an ideal response?
The impossibility theorem is a proposition demonstrated by Kenneth Arrow showing that no system of aggregating individual preferences into social decisions will always yield consistent, nonarbitrary results.
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The base year is always the year in which prices were the lowest
Indicate whether the statement is true or false
Melissa purchases shares in a government bond mutual fund. Is this included in the aggregate demand component “Investment”?
A. Yes, if it is a domestic mutual fund. B. Yes, if the purchase is made out of current income. C. No, unless the funds are deposited in a domestic financial institution. D. No, it would never be included.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of motorcycles, measured in terms of hybrid cars,
A. increases B. remains constant. C. initially increases, then decreases. D. decreases.
You are more sensitive to a change in price if you
A) spend a lot of your income on the good. B) spend a small percentage of your income on the good. C) buy very little of the good. D) do not buy the good regularly. E) have a very inelastic demand for the good.