When a household's disposable income falls to zero, what do we expect will happen?
A) The household's consumption spending also falls to zero.
B) The household will maintain a positive level of saving.
C) The household will maintain its previous level of consumption.
D) Consumption will fall to the level of autonomous consumption.
D
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Given that all countries have the same Cobb-Douglas production function, i.e. Y/N = (K/N)b, a ten-fold difference in per capita income requires a difference in capital per capita by a factor of
A) 10. B) 10b. C) 101/b. D) b.
Suppose duopolists face the market inverse demand curve P = 100 - Q, Q = q1 + q2, and both firms have a constant marginal cost of 10 and no fixed costs. If firm 1 is a Stackelberg leader and firm 2's best response function is , at the Nash-Stackelberg equilibrium firm 2's profit is
A) 400. B) 650. C) 800. D) 1200.
The Environment Ministry in Japan proposed a new carbon tax to meet Japan's obligations to reduce carbon dioxide emissions under the Kyoto Treaty. The tax would be levied on producers and importers of fossil fuels, and the expectation is that it would be largely passed on to consumers. The rationale for this tax is that it will:
A. reduce a negative externality. B. turn a private good into a public good. C. turn a public good into a private good. D. reduce a positive externality.
An increase in money supply causes the real interest rate to ________ and output to ________ in the short run, before prices adjust to restore equilibrium.
A. rise; rise B. rise; fall C. fall; rise D. fall; fall