In the aggregate expenditures model, if an economy operates below equilibrium GDP, there will be unplanned inventory depletion
a. True
b. False
Indicate whether the statement is true or false
True
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One of the commonly used assumptions in deriving the Heckscher-Ohlin model is that tastes are homothetic, or that if the per capita incomes were the same in two countries, the proportions of their expenditures allocated to each product would be the
same as it is in the other country. Imagine that this assumption is false, and that in fact, the tastes in each country are strongly biased in favor of the product in which it has a comparative advantage. How would this affect the relationship between relative factor abundance between the two countries, and the nature (factor-intensity) of the product each exports? What if the taste bias favored the imported good?
While waiting in line to buy a cheeseburger for $2 and a drink for 75 cents, Aaron notices that the restaurant has a value meal containing a cheeseburger, drink, and French fries for $3 . For Aaron, the marginal cost of purchasing the French fries:
a. would be zero. b. would be 25 cents. c. would be 50 cents. d. cannot be determined because the information about the price of the French fries is not provided.
Emission controls on automobiles are an example of a
a. corrective tax. b. command-and-control policy to increase social efficiency. c. policy that reduces pollution by allocating resources through market mechanisms. d. policy to reduce congestion on urban freeways.
According to the law of demand, a decrease in the price of a good causes
A) a rightward shift of the demand curve for that good. B) a leftward shift of the demand curve for that good. C) an upward movement along the demand curve for that good. D) a downward movement along the demand curve for that good.