If savings exceeds investment at full employment, demand will fall short of total output.
Answer the following statement true (T) or false (F)
True
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Can it be efficient for one trader to consume all units of the goods while the other trader consumes nothing? In other words, does this point lie on the contract curve?
What will be an ideal response?
Suppose the marginal propensity to consume is 0.75. What does this mean? What do we know about the marginal propensity to save? What do we know about the average propensity to consume?
What will be an ideal response?
Intertemporal decision making involves:
a. making decisions for immediate action. b. making decisions across time. c. reactionary decision making. d. making decisions that are temporary in nature.
A recessionary gap
a. is of little consequence in a capitalist economy b. represents actual physical output lost c. implies an equilibrium level of national income at less than full employment d. is associated with rising price levels e. will automatically close, according to Keynes