Matt graduates from college and gets a job paying $70,000 a year. While in school, he consumed 5 pounds of chicken and 10 pounds of shrimp a month. After he starts working, he consumes 4 pounds of chicken and 12 pounds of shrimp a month. If everything
else is held constant, we know that
A) chicken and shrimp are normal goods for Matt.
B) chicken is an inferior good and shrimp is a normal good for Matt.
C) chicken is an inferior good for Matt.
D) shrimp is a normal good for Matt.
Answer: B
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Explain how the static aggregate demand and aggregate supply model gives us misleading results about the price level, particularly with respect to decreases in aggregate demand
Describe how the aggregate demand curve is different in the dynamic model as compared to the static model. Describe how potential GDP is different in the dynamic model as compared to the static model.
Because there is an imbalance of information in a lending situation, we must deal with the problems of adverse selection and moral hazard. Define these terms and explain how financial intermediaries can reduce these problems
What will be an ideal response?
What are the main reasons (give at least three) that Ricardian equivalence might not hold?
What will be an ideal response?