Keynes believed that unstable investment caused the Great Depression. Using the simple Keynesian model, explain how a fall in investment affects equilibrium output
What will be an ideal response?
A fall in investment will reduce aggregate output by a greater amount that the initial fall in investment. This happens because of the multiplier effect.
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Physical capital is:
A. the talents, training, and education of workers. B. the physical labor of workers. C. the financial resources available for investment. D. the factories and machinery used to produce other goods and services.
The ________ is defined as the payments to the owner plus the change in a security's value expressed as a fraction of the security's purchase price
A) yield to maturity B) current yield C) rate of return D) yield rate
A deadweight loss:
A. can be large in a perfectly competitive market. B. is a reduction in aggregate surplus below its maximum possible value. C. is independent the amount produced and consumed. D. is equal to the difference between total willingness to pay and the total avoidable cost of production.
Suppose that Janis is maximizing her total utility from chairs and tables. If the marginal utility of the last table she purchased is 200 utils, and the prices of chairs and tables are $50 and $100, respectively, then the marginal utility of the last chair she purchased
a. is 100 utils b. is 400 utils c. is 200 utils d. is 50 utils e. cannot be determined without more information