Identify three factors that affect consumer spending. How does a change in consumer spending affect aggregate demand?
What will be an ideal response?
A change in consumer spending could occur as a result of an increase or decrease in consumer wealth resulting from factors such as increased stock values. It also could be caused by a change in consumer expectations about the future, a change in the level of household borrowing, or a change in personal taxes. If consumer spending increases, aggregate demand is likely to increase. If consumer spending decreases, aggregate demand is likely to decrease.
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If an individual had the option of receiving a cash transfer equal to the value of the housing subsidy, _____
a. they would be better off b. they could rent better housing than the public housing c. they could rent worse housing than the public housing d. all of the above e. a and b
Describe the advantages that a negative income tax has over other programs that have the same purpose
In the prisoners' dilemma,
a. the prisoners easily collude in order to achieve the best possible payoff for both. b. only one player has a dominant strategy. c. when each player chooses his dominant strategy the players achieve the best joint outcome. d. when each player chooses his dominant strategy the players reach a Nash equilibrium.
In order to understand how the economy works in the short run, we need to
a. study the classical model. b. study a model in which real and nominal variables interact. c. understand that "money is a veil.". d. understand that money is neutral in the short run.