What are private goods? Mention two important attributes of private goods.
What will be an ideal response?
A private good is a commodity characterized by both depletability and excludability. A commodity is depletable if it is used up when someone consumes it. A commodity is excludable if someone who does not pay for it can be kept from enjoying it.
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The traditional Keynesian approach concludes that an increase in government spending
A) generates a greater increase in investment spending. B) generates a greater increase in total spending because consumption spending increases as incomes increase. C) has no effect on total spending because consumers increase saving by an equal amount. D) generates an equal increase in total spending because government spending makes up part of total spending.
Explain why the price elasticity of demand varies along a demand curve, even if the demand curve is linear
What will be an ideal response?
Instrumental Variables regression uses instruments to
A) establish the Mozart Effect. B) increase the regression R2. C) eliminate serial correlation. D) isolate movements in X that are uncorrelated with u.
If real output in an economy is 1,000 goods per year, the money supply is $300, and each dollar is spent an average of 4 times per year, then according to the quantity equation, the average price level is
a. 3.33. b. 0.83. c. 1.20. d. 13.33.