Answer the following statements true (T) or false (F)
1. Investment is ultimately limited by the amount of savings in the economy.
2. The opportunity cost of investment is a reduction in future consumption
3. Businesses are the main economic investors, while households are the main savers.
4. Economists believe that most short-run fluctuations are the result of supply shocks.
5.When prices are inflexible, the economy will respond to demand shocks through short run changes in output and unemployment.
1. TRUE
2. FALSE
3. TRUE
4. FALSE
5. TRUE
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The change in import spending due to a change in domestic real income is called:
A) marginal propensity to save. B) marginal propensity to consume. C) marginal propensity to import. D) none of the above.
In the first years of the new nation, American producers
(a) found it difficult to compete with the British in manufactured goods. (b) quickly developed agricultural technology that was more efficient than that in England. (c) did not use British manufacturing technology because England had forbidden the export of its technology. (d) began to specialize in the production of manufacturing goods, selling them to England and Europe.
To simplify our consumption models, suppose U.S. consumers only purchase food and all other goods where food is plotted along the horizontal axis of the indifference map. If the U.S
Congress passes an economic stimulus package that pays $300 to each person, how does this affect the budget line for each consumer? A) Makes the budget line steeper B) Makes the budget line flatter C) Parallel outward (rightward) shift D) Parallel inward (leftward) shift E) none of the above
If the supply curve is more price elastic than the demand curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?