In a market economy,
a. resources are distributed equally across the all possible uses.
b. resources move to higher valued uses in response to changes in price.
c. resource usage is independent of the price.
d. most resources are distributed by the government.
e. all of the above.
b. resources move to higher valued uses in response to changes in price.
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If there is an increase in the future marginal product of capital in a small open economy, it causes the current account to ________ and saving to ________
A) fall; rise B) rise; remain unchanged C) fall; remain unchanged D) rise; rise
Real money demand in the economy is given by
L = 0.3Y - 600i, where Y is real income and i is the nominal interest rate. In equilibrium, real money demand L equals real money supply M/P. Suppose that Y equals 2000 and the real interest rate is 5%. (a) At what rate of inflation is seignorage maximized? (b) What is the maximum amount of seignorage revenue?
The funds used to purchase capital goods are called
A) investment. B) savings. C) financial capital. D) dividends and interest.
Refer to the information provided in Table 22.3 below to answer the question(s) that follow. Table 22.3 PointAggregate Income (Y)Aggregate Consumption (C) A 15 19 B 30 23 C 45 27 D 60 31 E 75 35 F 90 39The data in the table was used to estimate the following consumption function: C = 20 + 0.2YRefer to Table 22.3. The error for point B is equal to
A. -3. B. -1. C. +1. D. +3.