Judging from the circular flow diagram, what happens to dollars that households earn as wages?
a. They are given to other households in the form of tax distributions.
b. They are given to firms in exchange for capital and labor.
c. They are recycled back to firms when households buy products and services.
d. They are removed from the simple circular flow diagram, making the circle smaller.
c. They are recycled back to firms when households buy products and services.
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If aggregate demand falls short of current output, business firms will ________ production to ________ inventories
A) cut; keep from accumulating B) expand; keep from accumulating C) cut; build up D) expand; build up
The demand for labor is given by L(w) = 1000 - .5w, where w is the minimum wage. Find the level of w that maximizes the total wage payment, wL(w). What is the wage-elasticity of labor demand at the maximizing minimum wage?
What will be an ideal response?
Suppose a country institutes an investment tax credit and that leads to an initial increase in investment spending of $100 billion. Suppose the multiplier is 1.5 and the economy's real GDP is $5,000 billion. This action is
A) expansionary and will shift the aggregate demand curve to the right by $750 billion. B) expansionary and will shift the aggregate demand curve to the right by $150 billion. C) expansionary and will shift the aggregate demand curve to the left by $7500 billion. D) expansionary and will shift the aggregate demand curve to the left by $150 billion.
An indifference curve provides the set of consumption alternatives that
A) yield the same total amount of satisfaction. B) maximize the utility of the consumer. C) can be purchased for the same amount of money. D) yield the same marginal utility for the last unit consumed of each good.