As a component of GDP, consumption expenditures refers to purchases by consumers of currently produced goods and services
Indicate whether the statement is true or false
TRUE
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The quantity demanded of a product increases as
A) the price of the product rises. B) the price of the product falls. C) consumer income rises. D) the prices of other products fall.
Consider the monopolist depicted in the figure above. The profit maximizing level of output for a single-price monopolist is
A) 7. B) 11. C) 13. D) 22.
Suppose a Big Mac costs $4.20 in the United States and 9.55 zlotys in Poland. If the exchange rate is 2.77 zlotys per dollar, purchasing power parity predicts that
A) the dollar is undervalued. B) the zloty is undervalued. C) the zloty is overvalued. D) both the dollar and the zloty are undervalued.
An individual has preferences consistent with prospect theory. The person takes their current wealth of $10,000 (plus any certain additions) as their reference point. Gains above this reference point are worth +1 util. Losses below this reference point are worth -2 utils. The person is faced with two choice problems. The first involves a choice between (A) no gamble and (B) a gamble with an equal
chance of winning $1,800 and losing $1,000 . The second choice problem, the person first has $1,000 taken away (resulting in the adjustment of the reference point). The choice is then between (C) being given back $1,000 for sure and (D) an equal chance of winning $2,800 or nothing. What choices would the person make? a. A and C. b. A and D. c. B and C. d. B and D.