In a model with leisure hours and a composite consumption good, you cannot tell whether workers will work more or less if tastes are quasilinear in the consumption good.
Answer the following statement true (T) or false (F)
True
Rationale: The substitution effect will cause workers to work less -- but leisure is a normal good (since tastes are quasilinear in consumption), and this implies a wealth effect in the other direction.
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Statistical studies of the relationship between interest rates and later depreciation rates show that
A) the interest difference has been a very bad predictor in the large swings of exchange rates. B) the interest difference has been an accurate predictor in the large swings of exchange rates. C) the interest difference has correctly predicted the direction in which exchange rates would change. D) the interest difference has not yet been studied as a predictor in the large swings of exchange rates. E) the interest difference is unrelated to the large swings of exchange rates.
What most accurately describes the trend in the Gross Domestic Product of the US between 1870 and 2007?
a. Real GDP increased by about two percent per year. b. Although nominal GDP increased significantly, real GDP went up only slightly because of inflation. c. Both nominal and real GDP have been flat because the periods of inflation were offset by the periods of deflation. d. The fluctuations in GDP have become greater over time, and were largest in the late 1900s.
What is the phase of the business cycle when GDP reaches its maximum point?
Because the goods offered for sale in a competitive market are largely the same,
a. there will be few sellers in the market. b. there will be few buyers in the market. c. only a few buyers will have market power. d. sellers will have little reason to charge less than the going market price.