Why is the paradox of thrift considered to be a paradox? Because an increase in saving causes
a. consumption to fall, causing the equilibrium level of national income to fall, thus leaving saving unchanged or even lower
b. consumption to also rise, causing the equilibrium level of national income to rise, resulting in higher than anticipated saving
c. investment to also rise, causing the equilibrium level of national income to rise,resulting in higher than anticipated saving
d. investment to fall, causing the equilibrium level of national income to fall, thus leaving saving unchanged
e. consumption to fall, causing the equilibrium level of national income to rise, resulting in higher than anticipated saving
A
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Does the raising of reserve requirements automatically decrease the money supply? Why or why not?
What will be an ideal response?
Barriers to entry might include all but which of the following?
a. Huge capital expenditures required to get started in production b. Patents c. Sole ownership of a strategic resource d. Exclusive government franchise e. Positive economic profit
Assume milk is used to produce ice cream. Ceteris paribus, a decrease in the price of milk will cause the equilibrium price of ice cream to
A. Increase and the equilibrium quantity of ice cream to increase. B. Decrease and the equilibrium quantity of ice cream to increase. C. Decrease and the equilibrium quantity of ice cream to decrease. D. Increase and the equilibrium quantity of ice cream to decrease.
Which one of the following will shift the consumption function upward?
A. higher interest rates B. expectations that the economy will grow in the future C. a decrease in money holdings D. higher capacity utilization rates